Despite UK retail market headwinds, Game Digital (GMD) delivered solid sales and margin performance over the peak seven weeks to 5 January, and continues to trade in line with current market expectations for the full year.
Group like-for-like (LFL) sales strengthened to 2%, largely driven by 4.8% LFL sales growth in Spain, while the UK remained broadly flat. Reflecting the cyclical nature of the games market, group sales (gross transaction value) declined by c. 0.5% over the peak period and year-to-date, in line with expectations. A strong pipeline of new console launches is expected in 2020.
A cornerstone of GMD’s success is its relationships with the major publishers and exclusive content in the new software releases. Robust demand for higher-margin content and licensed merchandise & accessories, alongside a disciplined approach to discounting, resulted in an improved trading margin over the peak period. The company is also continuing to make significant inroads into its cost transformation programme.
Almost a year into GMD’s collaboration with Sports Direct, the roll-out of BELONG gaming arenas remains a key strategic objective for both parties. In the year to date, two arenas have opened and are trading well compared to similar arenas.
Neither the core retail business nor the prospects for BELONG are recognised in GMD’s share price which, at 23p at yesterday’s close, is less than its net cash of 33p per share.