Monday, UK games retailer GAME Group plc. (GMG.L) announced that despite a very difficult trading environment, its total sales and like for like sales for the 6-week period and 50-week period ended January 10, 2009 improved over last year.
The company said that for the 6-week period, its total sales increased by 16.6% and like for like sales improved by 5.4%. GAME Group's sales for the UK and Ireland rose 16.3%, with like for like sales registering a 10% growth. On a constant currency basis, the company's international sales were up 17.3%, in sharp contrast to like for like sales, which declined 3%.
For the 50 week period, GAME Group's total sales increased by 24.2%, while like for like sales rose 9.5%. The company's total sales for the UK and Ireland climbed 22.7% with like for like sales recording a growth of 11.4%. On a constant currency basis, the company's international sales rose 28.1%, while like for like sales grew 5.0%.The company's eCommerce sales for the period increased by 75.1% to £99.2 million.
GAME Group's top selling multi-format games for the 6-week and 50-week periods included Call of Duty: World at War (publisher - Activision Blizzard), FIFA 09 (EA Sports), Fallout 3 (Bethesda Softworks), Need for Speed Undercover (EA Games), and Guitar Hero World Tour (Red Octane). According to the company, the top selling multi-format games has, as expected, led to an increase in the proportion of higher margin software in the sales mix.
The company noted that it also experienced strong consumer demand for a number of single format games, including Mario Kart and Wii Fit on Nintendo Wii, Little Big Planet on Sony PS3, Gears of War 2 and Fable 2 on Microsoft Xbox360 and Brain Training and Professor Layton on Nintendo DS.
Looking ahead, the company expects profit before non recurring costs and tax for the 53 weeks ending January 31, 2009 to be not less than £122 million, compared to £75.5 million in the comparable year-ago period and slightly ahead of market expectations.
GAME Group expects gross margin for the 53 weeks ending January 31, 2009 to be around 140 basis points higher than last year's gross margin of 26.2% and slightly ahead of its previous guidance. Earlier, the company had forecast gross margin to grow 80 basis points to 110 basis points from last year.
The company said that the installed base of 3rd generation consoles has increased -- with around 22 million units already sold in the UK market. GAME Group said that it expects the successful hardware formats to continue to drive the demand for software during 2009. However, given the uncertain macro economic environment both in the UK and internationally, Game Group warned that revenue growth will be challenging and there will continue to be inflationary pressures on costs.
The company noted that it has a strong balance sheet with expected net cash of £30 million to £40 million as at January 31, 2009. It is anticipated that average net debt this year will be around £70 million and about £50 million in the year to January 2010.
GAME Group is slated to report its preliminary results for the 12 month period ending January 31, 2009 on Tuesday April 21, 2009.
GMG.L is up 0.68% trading at 148 pence a share on a volume of 345,071 shares.
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