Sales over the crucial Christmas trading period were up 5% YoY, helped by the increase in sales of VR products.
Companies: Game Digital
Game Digital (LON: GMD) has announced its Christmas trading results which saw a marginal uplift in sales YoY, bolstered by a boost in Sales in its Spanish operations.
The video game retailer saw Group sales jump 5% for the period from November 1st 2017 to January 6th, 2018, up from the 3.8% growth in the same Christmas period the year before.
Management said the rise in sales was helped along by an increase in demand for Nintendo Switch, PS4, the launch of Xbox One X as well as the increased adoption of VR.
It also said it had achieved further costs savings "in excess of the previously estimated full-year savings of approximately £4 million."
GAME saw the need to diversify and adapt away from its traditional brick-and-mortar retail business model a number of years ago, and developed its BELONG gaming arenas where gamers can "experience" and play games and test new tech before purchasing.
It said utilisation of its BELONG arenas jumped 28% in Q4 17.
Alongside its in-store experiences, the Group also has an Esports and Events division where it hosts gaming meets for various popular games. One of its events gives players the opportunity to win a stake of US$200,000 in the Call of Duty World League.
The Group's cash balance also grew to £67m from £43m in 2016 after completing the sale of its Multiplay Digital business.
Commenting, Martyn Gibbs, GAME Digital Chief Executive Officer, said:
"Over the peak period, GAME focused on its core trading in all channels across both its geographies in highly competitive markets whilst delivering further cost savings in UK Retail and made good progress with its strategic initiatives. These additional cost savings mean our performance remains on track; as ever our full year result will also be subject to continued availability of consoles, such as Nintendo Switch™, and the timing and success of new game releases.
BELONG continues to make pleasing progress, with plans to invest in the roll out of further arenas in the UK from February onwards, and we have exciting plans to open our first two arenas in Spain later this year."
Edison commented on the Group's update in its research note today:
"Net cash at year-end plus the full proceeds of Multiplay Digital is 35p per share. On this basis the market values the business at only 3.5x FY18e EBITDA, which we feel is misplaced, even taking into account the execution risks ahead. As we are not changing our forecast, we retain our 80p valuation."
Shares were steady at 60p at the time of writing.