17 Jan 2019 07:00
17 January 2019
GAME DIGITAL PLC
Trading Update
"Solid sales & margin performance in a challenging trading climate"
GAME Digital plc today provides an update on trading for the 7 weeks and 23 weeks ending 5 January 2019.
Group Headlines
· | Group Like for Like sales¹ were up 2.0% during the 7 week Christmas trading period and 1.0% in the first 23 weeks. |
· | Like for like sales in UK Retail were +1.1% for the 23 weeks and broadly flat over the 7 week period at -0.3%, while Spain (in local currency) was +2.1% year to date and +4.8% for the 7 weeks. |
· | Group sales were down 0.5% over the 7 weeks and down 0.6% over the first 23 trading weeks of the financial year to 5 January 2019. |
· | Group trading margin rate² improved versus the previous year over the 7 weeks, reflecting strong performance of higher margin exclusive products, a higher mix of higher margin products and higher promotional margins. |
· | Preowned remained challenging over the period. |
· | Exceptional working capital management delivered improved cash at 5 January 2019 of £96 million (6 January 2018: £89 million). |
· | The Directors expect the full year financial performance of the Group to be in line with their expectations. |
Strategic Update
In building the most valuable community for gamers we have three key pillars:
1. Improving the core specialist retail offering
· | Continued expansion of our exclusive proposition across new software releases has proved successful and growth in licensed merchandise and PC accessories have contributed to the Group's margin performance. |
· | Our programme to recruit and engage GAME Reward and GAME Elite customers continues to demonstrate our importance to the customer base and the relevance of a specialist retailer in the market. |
· | Further enhancements to our multichannel offer, online customer journey and delivery options have improved online conversion profitability and market share. New initiatives planned to launch in Spring 2019 will further enhance this offering. |
2. Expanding the Group's live gaming services
· | Two new BELONG arenas opened during the first 23 weeks of this year and the Group remains focused on identifying new and larger locations for future rollout. |
· | Continued progress made with the BELONG proposition driven by pay to play growth. |
· | Significant work completed on BELONG customer profiles to inform future arena development and competitive gaming tournaments. |
· | First international Insomnia event enacted. |
3. Optimising the organisation to deliver efficiencies
· | Cost and efficiency transformation programme well advanced in the UK with significant year-on-year cost savings expected across all major cost centres. |
· | The Group remains in active property negotiations across its estate, with over 200 property lease events in the UK before the end of December 2019. The Group's flexibility in this area, with an average of less than one year to the earliest break in both the UK and Spain, will facilitate the reshaping of our estate, our fixed cost base and the rollout of BELONG arenas. |
Sales Performance
7 weeks to 5 January 2019 | 23 weeks to 5 January 2019 | |||
Like for Like | Overall | Like for Like | Overall | |
Group | +2.0% | -0.5% | +1.0% | -0.6% |
UK Retail | -0.3% | -4.1% | +1.1% | -1.5% |
Spain Retail (€ basis) | +4.8% | +4.9% | +2.1% | +2.0% |
Commenting, Martyn Gibbs, GAME Digital Chief Executive Officer, said:
"Despite a challenging retail climate, the Group traded solidly over the Christmas period, with encouraging like for like sales in both territories. The Group successfully delivered growth from exclusives, higher margin categories and our specialist customer offer over the Black Friday event, which all contributed to a pleasing margin outcome and helped to offset the continued, managed decline of preowned.
"Our multichannel focus has delivered both trading margin growth and cost savings, while paid for services, such as multiple delivery options, have been well received by customers.
"Our supplier partners provided a strong line-up of exclusive content for key software releases over the 23 weeks and customer response and sales have been positive.
"The cost transformation programme enacted two years ago in the UK has gathered pace, enabling the Group to respond well to market changes and the economic uncertainty. We are working closely with landlords to manage down the fixed costs of operating our store portfolio and produce ongoing efficiencies.
"I would like to thank our colleagues across the UK and Spain who continue to work exceptionally hard to deliver great customer service over this important trading period."
The Group will announce its half year results in March 2019.
Enquiries:
GAME Digital plc | +44 (0) 1256 784 000 |
Martyn Gibbs | Chief Executive Officer |
Ray Kavanagh | Chief Financial Officer |
Citigate Dewe Rogerson | +44 (0) 20 7638 9571 |
Jos Bieneman | |
Michael Russell | |
Notes:
1 | 'Sales' or 'Gross Transaction Value' is a non-IFRS measure defined as total retail receipts and all other Group revenue excluding VAT and before the deduction of revenue deferral relating to loyalty points and other accounting adjustments. Gross Transaction Value reflects the full retail sales value of digital sales, agency sales (including sales by business partners on GAME's Marketplace website), warranties and other similar arrangements and thereby includes the publishers' and sellers' shares of those transactions. Gross Transaction Value provides the most reliable measure of activity in an environment where more sales are expected to move from physical to digital. |
2 | Group trading margin is defined as the gross profit from sales before all accounting adjustments, including loyalty deferral, rebates, provisions and other similar adjustments. Group trading margin rate is defined as group trading margin as a percentage of Gross Transaction Value. |
Forward Looking Statements
This announcement contains certain forward-looking statements which have been made by the Directors in good faith using information available up until the date they approved the announcement. Forward-looking statements should be regarded with caution as by their nature such statements involve risk and uncertainties relating to events and circumstances that may occur in the future. Actual results may differ from those expressed in such statements, depending on the outcome of these uncertain future events.
Notes to editors
Listed on the London Stock Exchange in June 2014, GAME Digital plc is dedicated to delivering an authoritative range of specialist gaming products and services to the gaming communities of the UK, Spain and beyond, providing more ways for gamers to enjoy more games and unique gaming experiences, more often. GAME's UK and Spanish retail businesses are the market leaders in those geographical areas, operating a total of over 540 stores across the two areas, a fully integrated multichannel offer including the multi-award winning GAME App, and over 4.5 million active customers across its Reward programmes. GAME is developing its proposition with the continued expansion of BELONG, the Group's leisure experience, which brings video-gaming to high streets, shopping centres and communities nationwide. Through its esports and events activities the Group is delivering unparalleled consumer gaming experiences directly, and on behalf of third parties, including its flagship event, Insomnia, the UK's largest gaming festival. The Group's visual recognition and augmented reality business, Ads Reality, is pioneering the use of new technologies to reach gamers and business partners outside its main markets.
For more information please visit:
www.gamedigitalplc.com, www.game.co.uk, www.game.es, www.insomniagamingfestival.com or www.adsreality.com
This announcement constitutes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR").