Game boss Martyn Gibbs has insisted would-be investors won’t be spooked by the retailer’s administration two years ago as it returns to the stock market.
Gibbs told Retail Week: “Investors are smart people. They’ll take our investment case on its own merits rather than looking back.”
Some analysts have also suggested that potential investors would be put off by the games market’s cyclical nature, which Game Group suffered from in the run up to its collapse. However Gibbs maintained that two of the biggest powerhouses in the sector – and the “bedrock” of the Games business – Xbox and Playstation, are not cyclical.
Gibbs said that Game benefits from a “lot of stability within the two major platforms” as a result of their more regular release schedule.
Gibbs said Game, which has rebranded its company name to Game Digital, plans to invest funds raised through the IPO in its digital offer. For instance, he wants to build more functionality in the App including richer product information. Gibbs said Game has 53% share of the digital market across its two territories of the UK and Spain. “A big part of what we do is digital,” said Gibbs. “We are absolutely leading the way.”
Game will also invest in its stores but Gibbs said not to the same extent as in other years as the retailer focuses on digital expansion. Gibbs pointed out that it has roughly the same UK market share – 33% – as Game Group had, despite it having far fewer stores, due its developing digital offer and its technological integration with key suppliers.
Game operates 560 stores across the UK and Spain, compared with 874 stores in 2012.
Gibbs said there are no plans to shutter any more stores. “Most digital products are bought in store,” he said. “And we’ve got flexibility; the average lease is less than three years, but I don’t think we’ll need to use that. We have no loss-making stores in the UK.”
He added that there were no plans to expand the store base further overseas, but he said Game could launch its digital offer in other countries. “There are opportunities with our web platform and our digital architecture,” he said. “There’s nothing to stop us looking there in the long term.”
Game is owned by hedge fund Elliott Advisors.
Game generated adjusted EBITDA of £50.8m in the 26 weeks to January 25, up from £24.5m a year before. Sales increased from £427.3m to £586.4m.
For the 52-week period to January 25, Game generated revenue of £815.7m and adjusted EBITDA of £47m.