First half struggles drag GAME Digital to a loss

Video game retailer Game Digital posted a decline of 3.6% in revenue for its full-year trading, as several challenges experienced in the first half carried over into the second and brought the group to a loss.

On Wednesday, Game reported that revenue had slipped to £782.9m for the year ended 29 July from the £812.5m it had posted twelve months prior, taking gross profit down 5.7% to £205.1m with it.

EBITDA fell 68.8% to £8m, and on the whole, Game recorded a loss before tax of £10m, a significant turnaround from the £1.1m profit it had recorded at the same time in 2016.

At the end of June, Game's stock plunged as much as 36.8% after being forced to issue a profit warning in which it stated earnings would be "substantially below previous expectations" due to an insufficient supply of the Nintendo Switch and a limited selection of new release games severely impacting sales of Xbox and PlayStation consoles.

In order to combat these difficulties, Game implemented its 'GAME Changing' strategy, that saw it focus heavily on enhancing its UK loyalty scheme, as well as expanding on its range of exclusive offers, building new categories and services, developing its online and multi-channel propositions, and taking significant steps to the optimisation of its retail locations.

"As evidenced by the tough UK market environment experienced in the first half of the year, some of these changes continue to provide challenges to our business, but they also provide significant opportunities. Our 'GAME Changing' strategy is focused on realising these opportunities and, while our overall financial results for the year were disappointing, I am pleased with the strategic progress we have made over the last 12 months," the firm said.

As part of the strategy, Game recorded a loss of £6m from its Events, Esports and Digital budget, reflecting investments made in the period to support significant planned future growth.

Martyn Gibbs, chief executive officer, said, "Though our markets remained volatile last year, we made solid strategic progress as we continued to focus on those elements within our control; delivering on each of the four pillars of our strategy and creating a new cost base for our UK retail business."

"Whilst we remain mindful of the structural headwinds that remain in our core markets, we expect recent positive market dynamics to continue into our peak Christmas trading period, driven by strong growth in all elements of the PlayStation 4 category, continued customer demand for the Nintendo Switch, the launch of Microsoft's Xbox One X and continued stronger demand for related software," Gibbs added.

Game posted a loss per share of 7.1p for the full trading year, compared to earnings of 1.5p at the same time a year earlier.

As of 0825 GMT, shares had dropped 0.31% to 40.00p.