Game Digital interim profit drops but current trading more encouraging

Video game retailer Game Digital reported a 26.7% drop in interim pre-tax profit as the UK put in a poor performance but the company was more positive about current trading.

In the 26 weeks to 28 January, pre-tax profit fell to £16.5m from £22.5m in the same period a year ago, as revenue declined 9.1% to £499m.

Basic earnings per share came in at 7.7p, down from 9.7p the year before, and the company declared an interim dividend of 1p a share, down from 1.67p.

In the UK, retail revenue slid 20.7% to £320.2m. However, Spain put in a much healthier performance, with revenue there up 20.4% to £170.2m.

Chief executive officer Martyn Gibbs said: "We delivered a strong performance in digital and new VR technology, however our first half saw another tough period for console hardware and physical software sales in the UK, impacted by a weaker line-up of new games launches and the market-wide underperformance of certain key titles. Together, these dynamics resulted in a disappointing performance from our UK retail operations, however our Spanish operations and new business areas delivered further growth.

"We continue to prioritise our efforts on taking the necessary actions to respond to these challenges, whilst positioning the business to capitalise on major future market opportunities. Across the group we are working hard to improve operational efficiencies and reduce costs whilst implementing our GAME Changing strategy to reposition and transform the business, and I am encouraged with the progress we are

Game said that while market wide activity trends in the first half have continued into the early part of its second half, the launch of the Nintendo Switch has, as with most new console launches, brought positive impetus and growth to the whole games market. It added that it has been pleased with the positive trading performance delivered in the first few weeks of the second half.

At 0854 BST, the shares were up 5.7% to 42p.