Trading Statement
January 12 2010 - 2:00AM
UK Regulatory
TIDMGMG
RNS Number : 3761F
Game Group PLC
12 January 2010
12 January 2010
RNS
The GAME Group plc
Christmas 2010 Trading Statement
The GAME Group plc ('GAME' or 'the Group') is today providing an update on its
trading performance over the Christmas period and for the 49 weeks to 9 January
2010.
Sales for the 5 week period ending 9 January 2010
* Total Group sales decreased by 12.1%. Group like for like ('lfl') sales were
down by 13.8%.
* Total sales for the UK and Ireland decreased by 18.0% with lfl sales down by
17.5%.
* Total sales for International increased by 0.9% with lfl sales down by 5.9% on a
constant currency basis.
Sales for the 49 week period ending on 9 January 2010
* Total Group sales decreased by 11.1%. Group lfl sales were down by 14.8%.
* Total sales for the UK and Ireland decreased by 15.1% with lfl sales down by
16.8%.
* Total sales for International decreased by 1.3% with lfl sales down by 10.2% on
a constant currency basis.
Commenting on the announcement Peter Lewis, Chairman said:
"The negative trends in the pc and video games market, outlined in our previous
trading statement, continued over the key Christmas selling period despite
strong software releases and a sizeable installed base of hardware. This,
combined with the strong comparative period and the impact of customers shopping
later, resulted in like for like sales declines of 13.8% for the Group over the
last five weeks. Since Christmas, however, we have seen significant improvement
as customers have responded well to our mint and preowned sales offers and the
release of new software.
We now expect the Group profit before non-recurring costs and tax for the full
year to 31 January 2010 to be between GBP87m and GBP93m. This will be the second
best profit performance in the Group's history (2009: GBP126.2m; 2008:
GBP75.5m), although it is below market expectations.
In 2010/11 we expect the video games market to continue moving towards higher
margin software and new peripheral technology, to supply an unprecedented
installed base of consoles in the market. The Board remains mindful of the
uncertain macro-economic environment and the trends in the pc and video games
market. This combination of factors means that revenues are likely to decline
year on year but our sales mix will continue to move towards higher margin new
and preowned products.
We anticipate that the new technology in 2010/11 will lead to increased consumer
choice and benefit GAME as customers seek expert advice and specialist service.
We believe that this, together with additional hardware pricing activity, will
continue to stimulate the market before we transition to the next growth phase
of the video games market and our business."
Trading update
The negative trends in the pc and video games market, outlined in our previous
trading statement, continued over the key Christmas selling period despite
strong software releases and a sizeable installed base of hardware. This,
combined with the strong comparative period and the impact of customers shopping
later, resulted in like for like sales declines of 13.8% for the Group over the
last five weeks. Since Christmas, however, we have seen significant improvement
as customers have responded well to our mint and preowned sales offers and the
release of new software.
In the UK, the pc and video games market declined by 24%1 in 2009 compared to a
prior year that enjoyed unprecedented demand for hardware and exceptional
launches of new peripherals and software. Much of the decline is due to a fall
in revenues from the Nintendo formats. The International markets in which we
operate have seen similar declines, although the impact from the
Nintendo formats has been less significant.
In an extremely challenging market, the Group has delivered a resilient
performance. This is a testament to our specialist proposition, which delivers a
market leading multi channel offer for our customers. This includes
competitively priced bundle deals, exclusive products, compelling trade-in
offers and a value driven preowned programme, all supported by our exceptional
teams and Reward Card.
Preowned, in particular, has continued to perform well for us in every
territory, showing year on year growth over the Christmas period with more
customers recognising the value for money that it provides.
The increased participation of preowned in the sales mix has, as anticipated,
increased our gross margin year on year. However, this has been partially offset
by the console bundle deals we introduced to drive revenues through December in
a very competitive market. We therefore expect our full year gross margin to
be around the lower end of our previous guidance of an improvement of 170 to 220
basis points on last year.
Throughout the year we have maintained strong cost control disciplines and have
delivered the additional GBP6m of synergies outlined in previous guidance.
We now expect the Group profit before non-recurring costs and tax for the full
year to 31 January 2010 to be between GBP87m and GBP93m. This will be the second
best profit performance in the Group's history (2009: GBP126.2m; 2008:
GBP75.5m), although it is below market expectations.
Outlook for 2010/11 financial year
In 2010/11 we expect the video games market to continue moving towards higher
margin software and new peripheral technology, to supply an unprecedented
installed base of consoles in the market (28.5m units in the UK alone, compared
to 22.0m units in January 2009)2. The Board remains mindful of the uncertain
macro-economic environment and the trends in the pc and video games market. This
combination of factors means that revenues are likely to decline year on
year but our sales mix will continue to move towards higher margin new and
preowned products.
There is a strong schedule of new releases in the first half including Mass
Effect 2 from EA, Splinter Cell: Conviction from Ubisoft, Bioshock 2 from Take
Two, and God of War 3 from Sony. Microsoft and Sony have announced that they
will each launch new motion sensing technology, with Microsoft recently
confirming that Project Natal for the Xbox360 will launch this November. We also
expect further manufacturer pricing and promotional activity supported by strong
software launches throughout the course of the year.
We anticipate that the new technology in 2010/11 will lead to increased consumer
choice and benefit GAME as customers seek expert advice and specialist
service.We believe that this, together with additional hardware pricing
activity, will continue to stimulate the market before we transition to the next
growth phase of the video games market and our business.
We continue to invest in our multi-channel offer. We believe that in the future,
a leading brand proposition must encompass stores, e-commerce and digital
distribution. Our aim is to be at the forefront of this evolutionary process. We
will provide further details of our plans with our full year results in April.
We will continue to exercise strong cost control disciplines with effective
management of the portfolio and infrastructure. The Group has a strong balance
sheet, with net cash as at 31 January 2010 expected to represent an increase on
the prior year. We expect capital expenditure in the 2010/11 year to be in the
region of GBP20 to GBP25 million (2009/10 estimate GBP32m).
The GAME Group plc will report its results for the 12 months to 31January on 21
April 2010.
- ends -
1 Source: GfK ChartTrack UK Panel 25/1/09 to 2/1/10
2 Source: GfK ChartTrack
Notes:
Store portfolio
+---------------------------+------------------+------------------+----------------+
| | 9 January 2010 | 5 December 2009 | 31 January |
| | | | 2009 |
+---------------------------+------------------+------------------+----------------+
| | Number | Number | Number |
+---------------------------+------------------+------------------+----------------+
| Company owned and | | | |
| concessions | | | |
+---------------------------+------------------+------------------+----------------+
| UK and Ireland: | 392 | 392 | 391 |
| - GAME - Stores | 33 | 52 | 52 |
| - GAME - Concessions | 257 | 257 | 253 |
| - Gamestation | | | |
+---------------------------+------------------+------------------+----------------+
| Total UK and Ireland | 682 | 701 | 696 |
+---------------------------+------------------+------------------+----------------+
| France | 199 | 199 | 192 |
+---------------------------+------------------+------------------+----------------+
| Iberia | 286 | 285 | 258 |
+---------------------------+------------------+------------------+----------------+
| Scandinavia | 68 | 68 | 66 |
+---------------------------+------------------+------------------+----------------+
| Czech Republic | 30 | 30 | 22 |
+---------------------------+------------------+------------------+----------------+
| Total Continental Europe | 583 | 582 | 538 |
+---------------------------+------------------+------------------+----------------+
| Australia | 118 | 117 | 101 |
+---------------------------+------------------+------------------+----------------+
| Total International | 701 | 699 | 639 |
+---------------------------+------------------+------------------+----------------+
| Total owned and | 1383 | 1400 | 1335 |
| concessions | | | |
+---------------------------+------------------+------------------+----------------+
| Franchises | | | |
+---------------------------+------------------+------------------+----------------+
| France | 0 | 0 | 1 |
+---------------------------+------------------+------------------+----------------+
| Iberia | 5 | 5 | 5 |
+---------------------------+------------------+------------------+----------------+
| Australia | 1 | 1 | 1 |
+---------------------------+------------------+------------------+----------------+
| Czech Republic | 0 | 0 | 0 |
+---------------------------+------------------+------------------+----------------+
| Total franchises | 6 | 6 | 7 |
+---------------------------+------------------+------------------+----------------+
| Total operational outlets | 1,389 | 1,406 | 1,342 |
+---------------------------+------------------+------------------+----------------+
Enquiries:
+-------------------+---------------------------------------------+--------------------+
| GAME Group plc | Lisa Morgan, Chief Executive | +44 1256 784566 |
| | Ben White, Group Finance Director | |
| | Simon Soffe, Investor Relations Director | |
+-------------------+---------------------------------------------+--------------------+
| | | |
+-------------------+---------------------------------------------+--------------------+
| Brunswick | Jonathan Glass | +44 207 404 5959 |
| | Wendel Verbeek | |
| | Oliver Hughes | |
+-------------------+---------------------------------------------+--------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTUAOWRRKAAAAR
Game (LSE:GMG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Game (LSE:GMG)
Historical Stock Chart
From Jul 2023 to Jul 2024
