13th Jan 2015 17:34
LONDON (Alliance News) - Video game retailer GAME Digital PLC said Tuesday that due to lower than expected margins on its hardware sales, it expects its full year earnings before interest, tax, depreciation and amortisation to be broadly in line with its previous year's figure of GBP51.3 million.
The company said that whilst it saw hardware volume sales up 25.1% over the Christmas trading period, the eleven weeks to January 10, group sales fell 5.4% at constant currency due to lower selling prices and margins.
GAME said it had seen a "highly competitive" Christmas trading period, with hardware and software bundles helping to drive growth in sales of next generation video games consoles. Additionally, Black Friday "accelerated consumer behaviour", driving lower average selling prices, and unprecedented bundling of games over the period.
GAME said that its operational execution over the Christmas period had been "smooth", with continued cost controls help deliver strong cash generation. It reiterated its intention to return excess cash to shareholders, and said it will provide further updates in "due course."
Over the Christmas period it added 250,000 reward card customers. It said that it had seen further momentum in the sale of digital content, with digital receipts up over 40% since the start of the year compared to the previous year.
GAME said it expects to achieve sales growth in its second half on the back of new software releases and growing customer bases for the Xbox One and Playstation 4 consoles.
"Our strategy is to grow customer lifetime value and over the Christmas trading period, starting with Black Friday, we invested margin in offering gamers competitive product propositions through the bundling of games with hardware and reduced pricing, to recruit as many new generation customers as quickly as possible," said Chief Executive Officer Martyn Gibbs in a statement. "We now have a huge customer base within the new formats, to sell both mint and pre-owned physical and digital content and accessories to over the long term."
GAME expects to announce its half year results March 24.
Shares in GAME closed up 1.2% at 348.00 pence Tuesday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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