UK high street retailer GAME has announced increased revenue for the past financial year, but has also reported that profits are down.
Revenue was £517.4 million, but profit before tax fell from £16.5 million in 2016/2017 to £12.3 million in 2017/2018. This drop-off has been attributed to the firm's retail arm, which saw a drop from £22.1 million in 2016/2017 to just £9.7 million in 2017/2018.
According to GamesIndustry.biz, this decline is down to decreasing margins, as well as a dip in pre-owned sales - a major part of GAME's retail approach. Store savings of £5 million have helped lessen the impact of this drop, although this has also resulted in a decline in GAME's overall console market share.
Despite the doom and gloom, there are some positive points to pick up on. GAME's "Gross Transactional Value" is up 3.8 percent to £586.8 million, thanks to a 24.7 percent rise in hardware value, a 3.3 percent increase in physical software and a 31.5 percent jump in events and digital sales. The company is planning on opening 100 of its "Belong" stores within the next three years, including concessional outlets in UK retail giant Sports Direct, which has a 50 percent stake in the Belong brand.
CEO Martyn Gibbs had this to say:
During the period important strategic progress was achieved, helping us to better position the Group for our development in the rapidly growing esports market with our unique and high margin concept traded under the Belong banner.
This is further facilitated by entering into a new and exciting collaboration with Sports Direct that will allow us to accelerate our expansion and help develop a larger scale experience based gaming business than previously planned and steadily reposition our retail offering. The traditional retail landscape is under increasing pressure and we have developed a strong growth strategy to utilise the valuable components of our core business in building our new experience based gaming offer.
We also delivered a strong sales performance in the first half of the financial year, driven by our ability to capitalise on strong customer demand for consoles - particularly Nintendo Switch - a stronger line up of new software releases and the further development of the Group's gaming experiences and events offering.
Furthermore, during the period UK Retail delivered cost savings of £5 million as we continued to re-shape and right size the business. We continue to negotiate property savings and, where appropriate, close stores, rationalise retail working hours and deliver further operational and procurement benefits as well as focus on our core retail opportunities including a large array of new software releases particularly during the final quarter of the 2018 calendar year.
It would seem that despite coming through some tough times, GAME is in good shape for the future, and is aware of the shifting sands of the games industry. Hopefully it can shape a business which is nimble enough to avoid falling into the kind of problems that so nearly sank it not so long ago.