Game Group bullish despite Christmas sales slump

UK retailer Game Group insists it will return to growth and is "well-prepared" for a year in which at least two new consoles will be released, despite sales over the Christmas period dropping by almost 15 per cent.

The company has revealed that total sales for the eight weeks to January 7 fell 14.7 per cent year on year across the group, with like-for-like sales - which remove the impact of store closures - down 12.9 per cent.

During the 49 weeks to January 7, sales were down 11.9 per cent, but the company put a positive spin on the slump by pointing out that it was ahead of the overall game market, which declined 13.1 per cent.

Game Group, which owns major high street chains Game and Gamestation and has 610 stores across the UK, exercised tighter control over its finances in 2011, and expects full-year operating costs to be down by between £8 million and £10 million. It expects to finish the year in a broadly similar cash position to last year, when it had £120 million in the bank.

However, the company goes on to admit that it may fail to meet its EBITDA targets, which measure cash earnings before interest and tax and are a measure of a company's ability to pay its debts. Game Group says it maintains "regular and constructive dialogue with its lenders, who remain supportive."

"Our industry had an incredibly tough 2011, and so did we," said CEO Ian Shepherd. "We remain the market leader and have a clear strategy which will return the business to growth. We are adapting to the changing market and are well prepared for the next hardware cycle."

The company expects to be the European market leader in sales of PlayStation Vita, the new Sony handheld which launches on February 22, and Wii U, which is expected before the end of the year. 

Source: Game Group