Game Digital said full-year sales have slowed, but it’s not game over for specialist retailer as its property cost-cutting strategy and tilt towards e-sports are helping it reach the next level.
The business, which went bust in 2012 but floated two years later, said today that its full-year sales are likely to slip 0.3 per cent to £780million, while slower sales of second-hand video games and kit weigh on its bottom line.
However, its gross transaction value (GTV) rose 1.8 per cent in the year to £907million, buoyed by popular new game releases, such as God of War 3.
Game endured tough times while PC gaming and digital downloads transformed the market
Game Digital shares rose more than 4 per cent in early trading to 29p.
During the year, Game has ploughed ahead with radical turnaround plans, as it strives to become less reliant on retail sales and diversify into higher-margin gaming experiences, e-sports and events.
E-sports involve gamers battling it out in front of crowds at events such as ‘Insomnia’, which Game Digital owns.
The firm recently struck a deal with Mike Ashley’s Sports Direct to help fund the roll out of its new ‘Belong’ arenas – custom built gaming bunkers where customers can pay to play the latest releases.
Today, boss Martyn Gibbs, said this new division is gaining traction.
Ashley, who recently bought House of Fraser and has a near-30 per cent share of Debenhams, also holds a large stake in Game and has vowed to help it launch 100 Belong arenas within three years, some of which will be set up in his Sports Direct stores.
The first of these opened in Westfield Stratford earlier this month, with a second arena in Lakeside Thurrock set to open in September.
Its pay-to-play gaming arenas mark a step change from retail stores to gaming experiences
Gibbs said: ‘Opening the first two arenas in collaboration with Sports Direct represents a significant step forward as we implement our strategy to increase the availability and scale of Belong, our experienced-based gaming offer and e-sports activities.’
The business, which has 540 stores across the UK and Spain, is also – like many retailers – attempting to cut costs by renegotiating store leases with landlords and ‘reorganising’ its head office and distribution teams.
Game said ‘significant progress’ had been made on this during the year, full details of which will emerge when it reports preliminary results in November.
Gibbs said: ‘We have made further progress in the second half of the year to right-size the UK retail business by reducing the cost base, whilst capitalising on all market opportunities to address the challenges and changes in the UK retail market.
‘This review of costs will continue into the next financial year.’