Press releases
Annual General Meeting: Trading Update to 27 June 2009
02/07/2009
Peter Lewis, the Chairman of GAME, Europe’s leading specialist retailer of pc and video games products, has made the following statement in advance of the company’s Annual General Meeting at 10.00am today.
Trading Update
"I am pleased to report that GAME continues to perform in line with our expectations.
For the first 21 weeks to 27 June 2009, total Group sales were down by 9.1%. Like for like (lfl) Group sales for the same period were down by 15.4%. In the UK and Ireland, total sales were down by 12.4% and lfl sales were down by 15.8%. In our International business, total sales were down by 1.1% and lfl sales were down by 14.4%.
These lfl results are in line with expectations given the very strong sales in the comparative period (+25.0% lfl) in 2008, which included unprecedented software releases such as Mario Kart, Wii Fit and Grand Theft Auto (GTA) IV.
We have seen good gross margin growth due to higher margin software and accessory sales being a larger part of the sales mix and our preowned proposition continuing to perform well.
Our sales performance to date, together with our gross margin increases and continued cost focus, means that we expect to deliver first half profits before tax and non-recurring costs in line with plan at between £13m and £16m (2008/09: £36.4m). The profit performance last half year was exceptional and this half year should be viewed in the context of our seasonal business, when customarily all Group profits are made in the second half.
Integration
The integration of our GAME and Gamestation businesses is progressing well and remains in line with the planned timetable. We expect the two brands to share the same operating and distribution platform by September 2009.
We remain confident of generating synergies of around £16m this year (2008/09: £10m). The non-recurring costs of the integration will be in the region of £6.5m this year and the capital costs will be approximately £5m.
Capital Expenditure and store portfolio
In the year to date, we have opened a net 25 stores bringing the existing portfolio to 1,367 stores (Note 1). We plan to open up to 50 to 60 additional stores before the key Christmas trading period. The majority of the store openings will be in our International business.
We are continuing to invest in our multi-channel proposition, both in the UK and Internationally. This will allow us to enhance the online customer shopping experience and continue the growth we have experienced in our eCommerce business.
Our capital expenditure for the year is estimated to be between £30m and £35m (2008/09: £55m) excluding capital costs relating to the integration of Gamestation.
The Board
As previously announced, Ben White will today be appointed to the Board as Group Finance Director following the resignation of David Thomas. I am very pleased to welcome Ben to the Board. His range of experience and knowledge of GAME will be an asset to the business.
Outlook
To date, the first half performance in all our markets has been in line with our expectations. We have maintained or improved market share in each of our territories, and we remain focussed on providing the best service and value for our customers through our unrivalled specialist retail proposition.
Whilst we remain mindful of the significant challenges in the wider economic environment, our full year performance will be driven by the increased ownership of consoles which will increase demand for software
The installed base of third generation hardware continues to grow, albeit at a slower rate than last year. (Note 2). In the UK the ownership of third generation hardware rose by 54% in the 12 months to June 2009.
The second half software line up is very encouraging with strong titles such as Wii Fit Plus, DJ Hero, Mario and Sonic at the Winter Olympics, Professor Layton and Pandora’s Box, Assassins Creed 2, Forza Motorsport 3, Singstar: Take That and Halo ODST, along with the annual sequels to bestsellers including Call of Duty Modern Warfare 2, FIFA 2010, Pro Evolution Soccer 2010, Need for Speed and Splinter Cell. We expect our preowned business to continue to grow as consumers focus increasingly on value for money.
In line with previous guidance we anticipate that, as higher margin new and preowned software increases within the overall sales mix, the Group gross margin for the year to 31 January 2010 will improve by 150 to 175 basis points (Note 3).
With the benefits from the GAME and Gamestation integration, good cost control disciplines, the continued strength of preowned and online sales, the growing installed base of hardware and the strong software line up, the Board remains confident in the outlook for the year to 31 January 2010."
- ends -
Notes:
1. Store portfolio
| 27 June 2009 Number |
31 January 2009 Number |
|
|---|---|---|
| Company owned and concessions | ||
| UK and Ireland | ||
| - GAME | 444 | 443 |
| - Gamestation | 254 | 253 |
| Total UK and Ireland | 698 | 696 |
| France | 198 | 192 |
| Iberia | 270 | 258 |
| Scandinavia | 67 | 66 |
| Czech Republic | 21 | 22 |
| Total Continental Europe | 556 | 538 |
| Australia | 107 | 101 |
| Total International | 663 | 639 |
| Total owned and concessions | 1,361 | 1,335 |
| Franchises | ||
| France | - | 1 |
| Iberia | 5 | 5 |
| Australia | 1 | 1 |
| Total franchises | 6 | 7 |
| Total operational outlets | 1,367 | 1,342 |
2. UK Installed Base (units, million)
| Wii | NDS | DSi | PS3 | PSP | XB360 | Total | |
|---|---|---|---|---|---|---|---|
| 27 Jun 09 | 5.4 | 9.1 | 0.3 | 2.2 | 3.3 | 3.9 | 24.2 |
| 31 Jan 09 | 5.1 | 9.0 | 1.9 | 3.2 | 3.3 | 22.5 | |
| 28 Jun 08 | 3.1 | 6.4 | 1.3 | 2.8 | 2.2 | 15.8 | |
| 02 Feb 08 | 2.2 | 5.5 | 1.0 | 2.7 | 1.9 | 13.3 |
Source: GfK ChartTrack (www.chart-track.co.uk)
3. Group gross margin for the 6 months to 31 July 2008 was 27.0% and for the 12 months to 31 January 2009 was 26.2%
Enquiries
| The GAME Group plc | Lisa Morgan Group Chief Executive |
+44 (0)1256 784566 |
| Ben White Group Finance Director |
||
Simon Soffe |
||
| Brunswick | Jonathan Glass Nina Coad Oliver Hughes |
+44 (0)20 7404 5959 |
