Game to invest £15m in its three year multi-channel strategy

The games retailer will hold its strategic update today, laying out plans for the business for the next three years.

Game said that as a result of repositioning the business to be “truly multichannel”, margins will decline by around 100 basis points in 2011/ 2012, as online and digital revenues become a larger part of its sales mix.

However group chief executive Ian Shepherd said the delivery of the three year plan will be”profit enhancing”.

He added: “The activities will increase our revenues from new and existing channels, which will improve overall profitability.”

Strategic goals will include delivering a “step change” in Game’s online revenues; achieving “seamless multichannel integration”;  driving increased footfall conversion rates; maximising new revenue streams and providing new payment options; and delivering customer relationship management initiatives to “deliver material revenue

Shepherd added: “Today is an important day for Game as we set out our strategic direction for the business. Importantly we will set out how we will invest behind our strategy and give clarity about how we will track delivery of our plans.

“Across the three year period we expect our operating cost base and capital expenditure to be broadly in line with 2010/11.

“In the short term, we have chosen to invest nearly all of the £15m of cost savings we expected to achieve in 2011/12 to deliver on our strategic goals.”

Game has also agreed new borrowing arrangements for a £160m three and a half year facility maturing in May 2014.    

The facility comprises a £30m term loan and a £130m multi-currency revolving credit facility. It replaces a £50m term loan and a £125m multi-currency revolving credit facility which was due to expire in May 2012.

Game said the new arrangement will repay the existing facility, and cover working capital requirements and “increase financial flexibility for the future”.  

Game group finance director Ben White said: “It is pleasing that we have both new and existing banking partners who understand our strategic plans, which have been developed so that we continue to be the leading retailer of PC and video games both in the UK and internationally.  

“The facilities give us the appropriate flexibility over the next three and a half years and enhance an already strong balance sheet profile.”