Game profits shrink in tough market

Videos games and consoles retailer Game Group today said its chief executive had stepped down as the firm unveiled a 27% fall in annual profits.

Videos games and consoles retailer Game Group today said its chief executive had stepped down as the firm unveiled a 27% fall in annual profits.

Lisa Morgan has left to pursue “other opportunities” after 14 years at the retailer and leading Game since 2006.

She will be replaced by board member and former Ladbrokes boss Chris Bell while a successor is sought.

Game reaped the rewards of a booming console market in 2008 with launches such as Nintendo’s Wii and hit games, but suffered last year in “difficult” conditions which saw the global console market fall by more than 20%.

The group said its 10% revenues slide outperformed the tough conditions but underlying pre-tax profits were down 27% to £90.4m (€103.5m) in the year to January 31.

The group saw decreasing demand for consoles and software last year but maintained its market leading position despite fierce competition from supermarkets, online retailers and new entrants such as HMV.

The latest instalments of long-running franchises such as 'Call of Duty: Modern Warfare' and 'FIFA 2010' also sold well, but software sales were hit by several titles being delayed.

Like-for-like sales across the group in the 11 weeks to April 17 are down 14.4%, although Game said this was in line with management expectations.

The firm – which gains 94% of its revenues from its store base – has 701 stores in the UK and Ireland, but has plans to close some outlets, including more than 100 in the UK, by Christmas 2013.

Game is however looking to develop its sales strategy to capitalise on growing markets for playing games online and digital downloads, which currently account for less than 1% of sales.

As well as growing its digital PC download business, the firm is spending £10m (€11m) over the next two years on developing a new e-commerce platform as well as a social networking site for gamers, called Gamesnation.

The company said the moves would “address and outpace” the competition it currently faces while maintaining its credentials as a specialist retailer.

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