Game Digital bosses predict profit levels will continue to come under pressure

GAME DIGITAL has said that full year revenue is expected to edge down and profit will continue to come under pressure as it renegotiates store leases with landlords.

In a year end trading update, the group said that statutory revenue for the 52 weeks to July 28 is set to fall from £782.9m to approximately £780m.

Game added that “challenges in the pre-owned business”, or second-hand video games, have impacted its overall gross profit rate.

The group’s total gross transaction value for the year increased by 1.8 per cent to £907.2m but dropped 1.6 per cent in the second half to £320.4m.

But it was boosted by strong sales of lower-margin digital and hardware and new ‘quality’ releases such as

Game also said that “significant progress” has been made on reducing fixed and variable costs across the UK store estate, via a lease renegotiation programme and a reorganisation of the head office and distribution centre teams.

Several retailers have asked landlords for rent reductions this year as the high street comes under intense pressure amid falling consumer spending and soaring costs.

Game gave no further details of the restructure but chief executive Martyn Gibbs hinted at further cost cutting.

“We have made further progress in the second half of the year to right-size the UK retail business by reducing the cost base, whilst capitalising on all market opportunities to address the challenges and changes in the UK retail market.

“This review of costs will continue into the next financial year,” he said.

Game’s high-margin gaming experiences business, or esports, is gaining traction after striking a deal with Mike Ashley’s Sports Direct in February, the firm claimed.

The tie-up with Mr Ashley will see Game launch 100 Belong esports arenas within three years.