Retailer struggling after "tough" period, adj EBITDA fell 23% and EPS fell 20%
Companies: Game Digital
UK gaming retailer Game Digital shares rose 6% on Wednesday despite posting slightly gloomy interim figures, with revenues falling 9%, gross profit falling 5.6%, EPS falling 20%, and cutting its interim dividend by 40%.
Sales in the Group's new retail categories, which includes digital content, PC gaming accessories and Virtual Reality equipment, rose 28.3%. Events, Esports and Digital activities sales grew 120%, with gross margins increasing 90 BPS to 24.7%.
However, core retail adj EBITDA fell to £26m from £33.8m (-23%), with the UK retail business' performance impacted by challenging market conditions and fewer new game launches - which are a major source of publicity for the firm.
Positives can be taken from the performance of the digital content, pre-owned tech, and PC gaming. It also made progress towards its live in-store gaming proposition under its new Belong brand, which will see accelerated investment and implementation after encouraging early results.
Financially the group has decent liquidity with £69m in the bank and access to c.£80m in credit facilities. Its interim dividend of 1p is markedly lower than the 1.67p paid last year, which the Group says is due to increased investment in its new retail concepts.
Martyn Gibbs, Chief Executive Officer, commented:
"We delivered a strong performance in digital and new VR technology, however our first half saw another tough period for console hardware and physical software sales in the UK, impacted by a weaker line-up of new games launches and the market-wide underperformance of certain key titles. Together, these dynamics resulted in a disappointing performance from our UK retail operations, however our Spanish operations and new business areas delivered further growth."
He added that the firm was prioritising its efforts on responding to these challenges, whilst positioning the business to capitalise on major future market opportunities. The second half of this point seems to have resonated with investors who appear to be optimistic of the company's prospects.
He continued:
"Across the Group we are working hard to improve operational efficiencies and reduce costs whilst implementing our GAME Changing strategy to reposition and transform the business, and I am encouraged with the progress we are making."
