Just when is seems every news story from a retail giant is not the best of news, Game Group gives us something to cheer about. The following press release from Game Group was released this morning.
Annual General Meeting: Trading update to 28 June 2008
03/07/2008
Peter Lewis, the Chairman of GAME, Europe’s leading specialist retailer of PC and video games products, has made the following statement in advance of the Annual General Meeting at 10.00am today.
Trading Update
“The PC and video games market has continued to grow strongly in this period and I am pleased to report that GAME is performing slightly ahead of our expectations for the first half of the year.
For the first 22 weeks to 28 June 2008, total Group sales were up by 54.0%. Like for like (lfl) Group sales (including Gamestation from 1 May 2008) for the same period were up by 24.8%.
In the UK and Ireland, total sales were up by 58.2% and lfl sales were up by 28.1%. In our International business, total sales and lfl sales were up by 43.9% and 16.9% respectively. Our International business is performing strongly albeit the lfl performance is slightly lower than the UK and Ireland primarily due to insufficient supply of Nintendo product particularly in Spain.
Gamestation
Gamestation continues to perform well and the Board is focussed on further strengthening the business through integration, implementation of best practice and realising the synergies from the acquisition.
In line with previous guidance, we expect to generate cost and revenue synergies of around £7m in the current financial year which implies an annual run rate for the 2009/10 financial year of around £10m. The non-recurring integration charge for the current year will be between £4m and £5m. Furthermore, there will be capital expenditure of around £4m in the current year required to achieve our integration plans.
The Board
We are delighted to welcome Dennis Woodside, 39, to our Board as a Non Executive Director. As Managing Director of Google in the UK, Ireland and Benelux he has a wealth of experience of the internet and a deep involvement in online retailing. His earlier consultancy experience with McKinsey and his legal training will also bring complementary skills to the Board.
Store Portfolio and Capital Expenditure
We will continue our expansion and grow our existing portfolio of 1,229 (Note 2) stores with up to 60 further new stores planned for the Christmas trading period. The majority of the store openings will be in our International business.
As part of our International growth strategy we are continuing to buy-in or close existing franchises. To this end, we have today completed the purchase of five of the remaining seven French franchise stores for a cost of €1.8m (£1.43m). These stores will now be operated as part of our core business and gives us a total of 181 stores in France.
Our capital expenditure for the year, excluding acquisitions, is estimated to be around £42m.
First half profits and outlook
To date, the first half performance in all our markets is very good due to ongoing demand for all hardware formats and an increased demand for software driven by an unusually strong release schedule including GTA IV, Wii Fit, Mario Kart and Metal Gear Solid 4.
The installed base of 3rd generation hardware continues to grow at an unprecedented rate and this is fuelling the sale of higher margin software. As a result, and in line with previous guidance, we expect that as higher margin software increases within the overall sales mix the Group gross margin for the year to 31 January 2009 will improve by 50 to 100 basis points (Note 1).
Because of the continuing positive trading performance and improved gross margin the Board now expects profit before tax and non-recurring costs for the 6 months to 31 July 2008 to be not less than £33.0m (2007: £2.7m).
Whilst sales are driven mostly by demand for consoles and the quality of new software releases, we recognise the challenges of the wider economic environment. In response, we will work hard on delivering competitive consumer offers and promoting the value associated with our successful preowned offer.
We look forward to the second half of the year and, although the quality of the first half release schedule is unprecedented, we remain confident about the key Christmas trading season.”
Retail Jobs Feed