- Game issues profit warning two days before Christmas
- Retailer blames “slower than anticipated” switch to new consoles
- Half-year EBITDA now forecast to be about £30m
Game has issued a profit warning following a “faster than expected decline” for old format content and a “slower” switch to new consoles.
Game said it now expects adjusted EBITDA for the 26 weeks ending January 23, 2016 to be about £30m amid “challenging” trading conditions.
It blamed customers being slow to switch to the new Xbox One and PlayStation 4 games consoles and said the decline in demand for games to be played on older consoles had slumped.
Boss Martyn Gibbs said the problems had been “compounded” by tumbling footfall as shoppers increasingly switch their spending online.
Gibbs added: “The trading conditions in the UK video games market have been challenging. The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market.
“The extent of the impact of this switch over has only become apparent in December, which has been compounded by lower year-on-year high street and shopping centre footfall.”
In the 21 weeks ending December 19, group sales fell 6.7% to £466.8m, as UK revenues dropped 11.4% to £353.5m.
Game said the Black Friday weekend trading was “stronger than overall performance”, but that didn’t prevent UK console sales plunging 28.3% during the period to £98.7m. The retailer’s total sales across the video games market in the UK were down 13.5% on the year.
Game said the next few days will be “the busiest trading period for the group”, but conceded that “disappointing” sales since the start of the school Christmas holidays forced it to re-adjust its half-year EBITDA forecast.
Gibbs added: “Despite the market challenges, Game has continued to deliver significant growth from new format content and newer categories such as licensed merchandise and preowned mobile phones and tablets, and we continue to prioritise these areas as well as growing our Multiplay business.
“While we are pleased with strong growth in our newer products, this has not been sufficient to offset the margin decline from sales of Xbox 360 and PlayStation 3 content and other old format software.
“The pre-Christmas period and the winter sale are very important to our customers and with market leading offers we remain well prepared in our stores and online for the remaining peak trading period.”