23rd Dec 2015 07:25
LONDON (Alliance News) - GAME Digital PLC on Wednesday said it now expects its adjusted earnings for its first half to be down from the previous year, citing "disappointing" sales since the start of the school Christmas holidays, and recent trends in the UK console and video games market.
The retailer said its total group gross transaction value for the 21 weeks to Saturday was down 6.7%, mostly as a result of a 20% fall in low-margin console sales.
GAME Digital said that trading conditions in the UK retail market have been challenging, with total sales for the video games market down 13.5% year on year for the period. Whilst it saw a rise in content sales for the new generation of video games consoles the Xbox One and PlayStation 4, this was more than offset by a sharp decline in content sales for the previous generation, down 56.7%.
Game Digital said that the next few days in the run up to Christmas will by its busiest trading period. However, as a result of recent trends and recent disappointing sales, it now expects its earnings before interest, tax, depreciation and amortisation, adjusted to strip out other exceptional costs, of around GBP30 million for the 26 weeks to January 23.
This compares to an adjusted Ebitda of GBP43.0 million in 26 weeks to January 24, 2015.
The company said it believes margins for UK retail will be higher in its second half, based on expected growth for Xbox One and PlayStation 4 software, sales of pre-owned mobile phones and tablets, and other growth categories.
"The trading conditions in the UK video games market have been challenging. The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market. The extent of the impact of this switch over has only become apparent in December which has been compounded by lower year on year high street and shopping centre footfall," said Chief Executive Officer Martyn Gibbs in a statement.
"The pre-Christmas period and the winter sale are very important to our customers and with market leading offers we remain well prepared in our stores and online for the remaining peak trading period," Gibbs added.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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