Game Group PLC have just published their financial results. Owners of the dominant UK high street chains GAME and Gamestation, the integration of which they report is complete, saw a 10% drop in turnover in the year to 31st January 2010.
Total turnover was £1.77 billion (£1,772,358,000 for those who want to argue about how many zeroes there are in a billion) with UK and Ireland stores contributing £1.07bn of the total. Revenue from their international stores was £602m with another £97m generated by their global online concerns (including the UK’s game.co.uk, gamestation.co.uk and gameplay.co.uk).
Sales of new hardware were responsible for 24.5% of the revenue (£433m), new software contributed 41.2% (£730m), preowned hardware and software 21.1% (£374m), while the nebulous “Other” provided the remaining 13.2% (233m).
The Groups’ profit (before tax and non-recurring costs) was £90.4m, down 27.1% on the previous year’s £124m. In an attempt to put a silver lining on that particular cloud they cheerfully point out that this year was their second best performance in the Group’s history.
Growing Importance Of Preowned
While sales of new hardware and software declined in comparison to the previous year, preowned sales grew by over £21m. That growth was magnified by an increase in the gross margins that the Group make on their preowned sales. That gross margin rose 2.6% to 41.7%. An over-simplified way of thinking of that margin is the difference between the trade-in price of a game and the cost of buying it preowned.
The report also includes a brief look at financial performance for the 11 weeks to 17th April since the end of the Group’s financial year. It suggests the British high street is continuing to suffer from the state of the economy. Group sales over those 11 weeks are down 13.3%. International business sales are up 1.7% due to the weak pound (down 3.9% at a constant currency basis) while online sales are down 3.5%.
Which leaves sales in UK and Ireland stores down by a whopping 20.8%. Now remember that this is comparing sales over those 11 weeks with the same 11 weeks last year. So while things were pretty bad then, they are significantly worse now. As an early indicator of what the video game market looks like this year it will not be a welcome one.
Bleak Outlook For UK Employees
Last week we reported on the reactions among the staff of the reduction in working hours at the Group’s stores. The financial report contains even more bad news for those staff. At the end of the financial year the Group had 677 GAME and Gamestation stores. By Christmas 2013 they expect to reduce that total to 550, closing almost a fifth of their stores.
It is a pretty safe bet that for cities and towns like mine, Peterborough, that have both GAME and Gamestation stores in close proximity, one of them will be closed within 3 years. We have known since GAME bought Gamestation that that would be the case, but we now have a rough timescale.
