Interim Management Statement (1687S)

TIDMGMG

RNS Number : 1687S

Game Group PLC

16 November 2011

16 November 2011

The GAME Group plc: Interim Management Statement

Current trading below expectations; medium term strategy making progress

The GAME Group plc ("GAME" or "The Group") today issues its Interim Management Statement for the 41 week period to 12 November 2011.

Trading Update:

Total Group sales were down 10.6% and like for like (lfl) sales down 8.6%. This is ahead of the overall video games market, which was down 12.3% in the same period. The performance of the market is below our expectations.

Revenues across all categories: software, hardware, preowned and accessories are down year over year. Major software titles are launching in line with first week expectations, but are then seeing a quicker tail-off than historically experienced. Customer footfall and basket sizes are down reflecting wider consumer uncertainty. In the year to date UK and Ireland total store sales were -13.0% and lfl sales were -10.5%. International total store sales were -8.4% and lfl sales were -6.8%. Ecommerce sales were flat.

In the 7 weeks since our last announcement, total Group sales were down 4.9% and lfl sales were down 2.9%. GAME has retained a market leading share on all major software titles.

Full year expectations:

On 27 September 2011 the Board stated that the Group was targeting full year lfl revenues of -3% to 0%, over-performing the overall market; gross margins down 100bps; and operating costs GBP6m to GBP9m lower than the previous year. The Board now expects that lfl revenues for the full year will be no better than -7%, still over-performing the overall market; gross margins will be down by at least 150 basis points; and operating costs will be GBP8 to GBP10 million lower than last year.

GAME continues to focus on delivering a further improvement in operating cash generation through strong working capital management, tight cost control and capital expenditure discipline. Combined with a robust balance sheet and available banking facilities, this means that the Group is well positioned for these difficult market conditions.

Strategic Update and Outlook:

Despite the short term market challenges, the medium term strategy is making progress:

-- Multichannel: Online margin has doubled since the launch of a new web platform, and online share has remained at 19%.

-- Right stores: The store closure programme is on target, with a net 37 closures this year. Footfall conversion is on track to grow by 1% this year (currently 18.7% vs. 17.6% in Q3 2010).

-- Unique product range: Group digital sales have grown over 40% in the year to date, as new initiatives have launched. GAME has released 15 exclusive editions of AAA software titles in the last 10 weeks, which have increased the Group's market share. Further exclusive editions will launch before Christmas.

-- Novel ways to buy: Preowned is 28% of total sales at 40% margin. GAMEwallet, a new way for customers to find and pay for digital games, launched in October.

-- Strong customer relationships: 2.3 million new customers have joined the loyalty schemes this year, taking the total to 19.3 million.

Ian Shepherd, GAME CEO, said:

"The overall video games market remains very challenging, despite strong title launches, and our guidance today reflects the extraordinary economic times in which we are operating. GAME has outperformed the market, reinforcing our position as market leader, and I am hugely proud of our teams. They remain focussed on delivering our strategy, controlling costs and driving operational cashflow, and we remain well placed to benefit in the medium term both from the next console cycle and the growth in digital and social gaming."

The Group will provide a Christmas trading update on 11 January 2012.

- ENDS -

 
                                1 November 2011  31 July 2011  31 January 2011 
                                         Number        Number           Number 
Company owned and concessions 
UK and Ireland:                             610           615              639 
- GAME - stores                             369           369              381 
- GAME - concessions                          9            10               11 
- Gamestation                               232           236              247 
 
France                                      194           195              197 
Iberia                                      292           292              287 
Scandinavia                                  57            62               65 
Czech Republic                               30            30               31 
Total Continental Europe                    573           579              580 
Australia                                    92            92               93 
Total International                         665           671              673 
Total owned and concessions               1,275         1,286            1,312 
Franchises 
Australia                                     1             1                1 
Total franchises                              1             1                1 
Total operational outlets                 1,276         1,287            1,313 
 
 
 Enquiries: 
  GAME Group         Simon Soffe, Communications & Investor 
   plc               Relations Director                       [phone] 
 
                    Jonathan Glass 
                     James Olley 
  Brunswick Group    Natalia Marisova                         [phone] 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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