The Group is regaining some of the ground it has lost with shares falling all year.
Companies: Game Digital
GAME Digital (LON: GMD) shares have risen sharply off the back of its year-end results and trading update, released this morning.
Shares are up over 35% today with the report showing healthy H2 figures, with market sales up 9% in the UK and 16% in Spain. Adjusting for the impact of a weaker Pound, the Spanish market rose 26% in Sterling terms.
The increase in H2 sales can be attributed to the release of the Nintendo Switch console in March, with sales of this console expected to continue to help GAME during the upcoming Christmas period.
Year-end Gross Transaction Value (GTV) was down to £891m from £912m in 2016, despite H2 GTV rising 7%. Year-end revenues are expected to be £780m, down from £823m in 2016.
A net cash position of £47m for year-end is expected to be reported, with Liberum's note this morning saying this will beat their expectation of £35m.
GAME has made cutting costs a long-term goal. In particular, significant focus has been placed on reducing costs across the Group's UK retail footprint, where it has over 220 lease events to manage by the end of 2018. This is expected to deliver a cost reduction of £5m.
The current cloudy retail environment has also led GAME to ramp up its digital and gaming events activities, in the form of its multiplayer game server technology and Esports "BELONG" arenas. Server technology sales more than doubled in the reported year, and its Esports operations were up over 50%.
Martyn Gibbs, Chief Executive Officer of GAME Digital, said that:
"We have been encouraged by the recent growth in both the UK and Spanish markets overall and we expect that this momentum will continue into peak trading driven by the benefits of continued customer demand for the Nintendo SwitchTM, the launch of Microsoft's Xbox One X and a strong line up of new games releases."
Commenting on the new Esports operations, the CEO also commented:
"GAME has now opened 18 BELONG arenas, and we have seen encouraging early performance. We have reviewed our operations and are now accelerating development plans as we seek to fully capitalise on the strong growth potential in our exciting and growing Esports activities."
GAME currently trades at a market cap of £42m, as revenue and profits for the Group have fallen over the three years to 2016. Operating margins have also fallen in this period.
