Game half-year profits tumble 32% as UK market remains "challenging"

The entertainment specialist said pre-tax profits for the 26 weeks ending January 23 came in at £22.5m, down from £33.2m during the same period last year.

Adjusted EBITDA dropped 23% to £33.1m, although this was ahead of the circa £30m guidance provided in January. Sales declined 6.3% to £549.2m.

Game said “the switch over from older gaming formats” to newer consoles like the PlayStation 4 and Xbox One “impacted profitability across the market.”

UK console sales slumped 28.7% during the period to £117.7m, but game said the impact on profitability was “modest” due to the low margins associated with the category.

It added that the effect of the switch was “further compounded” by lower shopping centre footfall during the Christmas trading period.

But its boss Martyn Gibbs insisted he remained “confident” in the retailer’s prospects and “excited” by plans for the business. 

Game is focusing on a strategy to broaden its offer into pre-owned electrical goods including mobile phones, tablets and PC accessories, while also expanding its eSports and events division. It has already acquired games festival organiser Multiplay and Spanish online platform SocialNAT.

The retailer also hailed “strong” performance in its Spanish business, where like-for-like sales advanced 16.1% during the period on a local currency basis. Revenues in Spain increased 5.2% to £141.4m.

Game chief executive Gibbs said: “Operating in the fast-paced video games industry continues to present both opportunities and challenges to our business. Market dynamics in the UK were challenging during our peak trading period, although sales trends improved in the last week of December and first three weeks of January. 

“In January we launched a review of the UK business and are committed to rapidly implementing measures to respond to current market trends. As well as pursuing commercial opportunities we are focussed on driving improvements in the consumer proposition and realising operational efficiencies to improve our performance.

“I remain confident in the prospects for the group. We are making good progress driving retail and business diversification, with strong growth delivered in higher margin categories such as preowned phones and tablets, PC accessories and licensed merchandise.”