Posted on April - 22 - 2010
Game profits shrink
Videos games and consoles retailer Game Group today said its chief executive had stepped down as the firm unveiled a 27 per cent fall in annual profits.
Lisa Morgan has left to pursue “other opportunities” after 14 years at the retailer and leading Game since 2006.
She will be replaced by board member and former Ladbrokes boss Chris Bell while a successor is sought.
Game’s UK chief operating officer Terry Scicluna also intends to step down, but will remain for a handover period.
Game reaped the rewards of a booming console market in 2008 with launches such as Nintendo’s Wii and hit games, but suffered last year in “difficult” conditions which saw the global console market fall by more than 20 per cent.
The group said its 10 per cent revenues slide to £1.77bn outperformed the tough conditions but underlying pre-tax profits were down 27 per cent to £90.4m in the year to January 31.
The group saw decreasing demand for consoles and software last year but maintained its market leading position despite fierce competition from supermarkets, online retailers and new entrants such as HMV.
The latest instalments of long-running franchises such as Call of Duty: Modern Warfare and FIFA 2010 also sold well, but software sales were hit by several titles being delayed Like-for-like sales across the group in the 11 weeks to April 17 are down 14.4 per cent, although Game said this was in line with management expectations.
The firm – which gains 94 per cent of its revenues from its store base – has 677 outlets in the UK at the moment but plans to cut this to 550 by Christmas 2013.
Game is however looking to develop its sales strategy to capitalise on growing markets for playing games online and digital downloads, which currently account for less than one per cent of sales.
As well as growing its digital PC download business, the firm is spending £10m over the next two years on developing a new e-commerce platform as well as a social networking site for gamers, called Gamesnation.
The company said the moves would “address and outpace” the competition it currently faces while maintaining its credentials as a specialist retailer.
Shares in Game slumped nearly 11 per cent to 90.35p.
Analyst Matthew McEachran, of Singer Capital, said he expects consensus pre-tax estimates for this year of £73.4m may come under pressure.
“This degree of management change at a time when the business is facing tough conditions is likely to be unsettling,” he said.
Similar Posts:
- Boots profits break £1bn barrier for first time
- Six per cent on ITV revenue
- CD re-seller Music Magpie keeps on growing
- Music revenues grew in 2009
- HSS has the tools to grow higher profits
