Game Digital profits slump as it faces challenging UK market

Pre-tax profit plummeted 32 per cent in the 26 weeks ended January 23 to £22.5m from £33.2m the previous year. Revenue also fell from £585.9m to £549.2m, a 6.3 per cent drop.

Game Digital issued a profit warning just before Christmas after it was hit by weaker-than-expected sales of computer games. Over Christmas Game was impacted by the console cycle.

Martyn Gibbs, chief executive of Game Digital, said: “Market dynamics in the UK were challenging during our peak trading period, although sales trends improved in the last week of December and first three weeks of January.

“In January we launched a review of the UK business and are committed to rapidly implementing measures to respond to current market trends.

“As well as pursuing commercial opportunities we are focussed on driving improvements in the consumer proposition and realising operational efficiencies to improve our performance.”

The firm enjoyed contrasting fortunes in the Spainish market where it said it delivered another strong performance in the first half, with increased sales, profits and market share. Like-for-like sales were up 16.1 per cent on a local currency basis in its Spanish business.

Game, which has 19 stores in Yorkshire and employs 133 permanent staff in the region, is now looking to diversify as retail trends continue to change in the video game market.

Mr Gibbs said he remained confident in the prospects of the group.

He added: “We are making good progress driving retail and business diversification, with strong growth delivered in higher margin categories such as preowned phones and tablets, PC accessories and licensed merchandise.

“In addition, sales of digital content were up almost 10 per cent and our customer engagement metrics remain positive. At the same time we expect the impact of falling legacy software sales to lessen in the future.”

Mr Gibbs said: “Increasing engagement with gaming communities and broadening our offer, both within and beyond retail, sits at the heart of our strategy. We are committed to investing in our teams and core foundations to support our plans for the business.”

Game has had a chequered history in recent years. It was rescued from bankruptcy in 2012.

Then called Game Group, the firm was one of the high profile high street collapses following the financial crisis.

Administrators closed 277 of its 610 stores and it was then bought out of administration in April 2012 by OpCapita, an investment firm working for Elliott Advisors.

Elliott, which has retained a significant stake in the business, has since revamped and refocused the chain.