Interim Management Statement
December 08 2010 - 2:00AM
UK Regulatory
TIDMGMG
RNS Number : 5541X
Game Group PLC
08 December 2010
8TH December, 2010
GAME GROUP PLC ("GAME")
INTERIM MANAGEMENT STATEMENT
The GAME Group plc ("GAME"), the leading European retailer of pc and video games
products, today issues its Interim Management Statement relating to the period
to 4 December 2010.
Trading Update
Peter Lewis, the Chairman of GAME, said:
"We have been encouraged by the like for like sales trends we have seen since
the half year. The difficult market has benefited from a strong launch schedule
of new software titles and peripherals, and we have remained committed to our
focus on market share.
For the 44 weeks to 4 December 2010, total Group sales were down by 8.8%. Like
for like (lfl) Group sales for the same period were -7.9%. In the UK and
Ireland, total sales were -14.7% and lfl sales were -12.2%. In our International
business, total sales were up 1.2% and lfl sales were -1.5%. Our Online
operations held firm with sales up 0.1%.
For the 18 weeks to 4 December 2010, total Group sales were down by 7.8%. Group
lfl sales for the same period were -4.6%. In the UK and Ireland, total sales
were -11.1% and lfl sales were -7.6%. In our International business, total sales
were -2.4% and lfl sales were up 0.5%. Online sales were -1.4%.
We have maintained our leading market share, including for the two key titles in
the period, Call of Duty: Black Ops and FIFA 11, which have both broken industry
records as the fastest selling games of all time(1). We were able to achieve
this by leveraging all of our specialist qualities: a huge range of products,
knowledgeable employees, close supplier relationships, an unrivalled CRM
programme, compelling value offers and exclusive extras.
As Microsoft's lead partner in Europe for Kinect(2), we took a very strong
market share of the product in each of our territories. The success of this
launch for GAME demonstrates both the strength of our relationship with
suppliers and the importance of a specialist multi channel retailer to showcase
innovative new technology.
All of our territories remain very competitive, with numerous retailers eager to
access a market that generates over $40bn of revenues globally. In order to
deliver the lfl performance we have outlined today and to maintain our market
share, we have continued to pursue a value proposition. We offer customers prime
trade-in deals and preowned products, attractive bundles on mint products, and a
wide range of exclusive promotions with our loyalty cards. These activities are
integral to our strategy of continuing to build our customer base, and will
continue through the Christmas trading period. A consequence is that we now
anticipate margins will be down by between 160 and 190 basis points on the prior
year.
As a key element of our value offer, preowned sales continue to grow as
increasing numbers of customers realise the value that it offers. It will now
represent approximately 25% of our sales mix (2009: 21%) over the full year.
We have maintained our focus on cost control, working capital management and
capital expenditure. As previously noted, we expect to make GBP7m of operating
cost savings this year and we expect capital expenditure to be around GBP18m
(2009: GBP30m).
Programmes to drive better performance in France and Australia are on track and
we are seeing improvements as each business grows its market share. To help
optimise performance in Australia we have closed 25 underperforming stores,
giving us a portfolio of 95 outlets in key locations. In line with previous
statements, the operational changes in France and Australia will result in
non-recurring costs of GBP10m to GBP12m in the current financial year.
We are operating from 1,319 stores as we approach Christmas (see table below).
We also continue to progress our multi-channel proposition. A new IT platform
which connects our businesses across all distribution channels is now in place
and we expect to see the full benefit of this next year.
Outlook
As we enter the key Christmas period, we have seen some positive indicators in
the market. Strong and innovative products are launching well, there is a record
installed base of consoles in each of our territories(3), and customers are
responding positively to our specialist offer. However, the ongoing weakness in
the market performance of hardware and casual gamer products means that we are
maintaining our cautious outlook for the remainder of the current financial
year. Our most significant weeks are still ahead of us, historically
representing over 25% of our annual revenues, and every part of our business is
primed to deliver everything our customers need.
- ends -
Notes:
1. On 1 October 2010, FIFA 11 sold 684k units in the first 24 hours - making it
the second fastest selling video game in UK history. Then on 9 November 2010,
Call of Duty: Black Ops sold 1.4m units in the UK market in the first 24 hours -
breaking a new record as the fastest selling video game in UK history (Total UK
market estimates; copyright UKIE / Compiled by GfK-Chart-Track).
2. Kinect for Xbox 360 is Microsoft's motion sensing peripheral. On 29 November
Microsoft announced global sales of 2.5m units in the 25 days since launch
(Source: Microsoft).
3. UK Installed base:
+-------------------------------+-----------+-----------+-----------+
| |6/12/2008 |5/12/2009 |4/12/2010 |
+-------------------------------+-----------+-----------+-----------+
| Number of 3rd generation | 20.4m | 27.2m | 32.4m |
| consoles: | | | |
+-------------------------------+-----------+-----------+-----------+
| Year to date hardware | +16% | -32% | -26% |
| revenues | | | |
| (1 Feb to 4 Dec) | | | |
+-------------------------------+-----------+-----------+-----------+
(Copyright GfK Chart-Track)
Store portfolio:
+-------------------------------+--------------------+--------------------+--------------------+
| | 4 December 2010 | 31 July 2010 | 31 January 2010 |
+-------------------------------+--------------------+--------------------+--------------------+
| | Number | Number | Number |
+-------------------------------+--------------------+--------------------+--------------------+
| Company owned and concessions | | | |
+-------------------------------+--------------------+--------------------+--------------------+
| UK and Ireland: | 641 | 635 | 677 |
+-------------------------------+--------------------+--------------------+--------------------+
| - GAME - stores | 382 | 382 | 390 |
+-------------------------------+--------------------+--------------------+--------------------+
| - GAME - concessions | 12 | 6 | 33 |
+-------------------------------+--------------------+--------------------+--------------------+
| - Gamestation | 247 | 247 | 254 |
+-------------------------------+--------------------+--------------------+--------------------+
| | | | |
+-------------------------------+--------------------+--------------------+--------------------+
| France | 197 | 198 | 199 |
+-------------------------------+--------------------+--------------------+--------------------+
| Iberia | 287 | 287 | 283 |
+-------------------------------+--------------------+--------------------+--------------------+
| Scandinavia | 68 | 68 | 68 |
+-------------------------------+--------------------+--------------------+--------------------+
| Czech Republic | 31 | 31 | 29 |
+-------------------------------+--------------------+--------------------+--------------------+
| Total Continental Europe | 583 | 584 | 579 |
+-------------------------------+--------------------+--------------------+--------------------+
| Australia | 94 | 118 | 118 |
+-------------------------------+--------------------+--------------------+--------------------+
| Total International | 677 | 702 | 697 |
+-------------------------------+--------------------+--------------------+--------------------+
| Total owned and concessions | 1318 | 1337 | 1374 |
+-------------------------------+--------------------+--------------------+--------------------+
| Franchises | | | |
+-------------------------------+--------------------+--------------------+--------------------+
| France | 0 | 0 | 0 |
+-------------------------------+--------------------+--------------------+--------------------+
| Iberia | 0 | 0 | 5 |
+-------------------------------+--------------------+--------------------+--------------------+
| Australia | 1 | 1 | 1 |
+-------------------------------+--------------------+--------------------+--------------------+
| Czech Republic | 0 | 0 | 0 |
+-------------------------------+--------------------+--------------------+--------------------+
| Total franchises | 1 | 1 | 6 |
+-------------------------------+--------------------+--------------------+--------------------+
| Total operational outlets | 1319 | 1338 | 1380 |
+-------------------------------+--------------------+--------------------+--------------------+
Enquiries:
+-------------------------------------------------------------------+----------------------------------------+
| The GAME Group plc: | +44 (0)1256 784566 |
+-------------------------------------------------------------------+----------------------------------------+
| Ian Shepherd, Group Chief Executive | |
| Ben White, Group Finance Director | |
| Simon Soffe, Investor Relations and Group Communications Director | |
+-------------------------------------------------------------------+----------------------------------------+
| Brunswick: | +44 (0)20 7404 5959 |
+-------------------------------------------------------------------+----------------------------------------+
| Jonathan Glass, Wendel Verbeek, Oliver Hughes | |
+-------------------------------------------------------------------+----------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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