GAME Christmas sales dip due to 'lower than expected' demand for Q4 game launches

GAME says its Group GTV (that's Gross Transaction Value) dipped 1.6% over the key three week Christmas sales period.

For the first 23 weeks of its financial year, the company says GTV is down 6.3%. As a means to highlight where some of that decline has come from, if you discount lower margin hardware, then GTV would have been up 2% for the Christmas period (three weeks ending January 7th) and up 0.7% for the entire 23 week period.

GTV is not the same as revenue. It is the total sum of money spent by consumers with GAME over the period, which doesn't take into account certain adjustments, such as supplier rebates, returns, reward points and so on.

The sales update comes ahead of GAME's Annual General Meeting today.

2016 for the UK games retail business overall was disappointing, and that is reflected in the retailer's figures. GAME's UK retail business suffered an 18.3% decline in GTV for the 23 weeks until January 27th. GAME CEO Martyn Gibbs said that "Overall demand for new games released in the period 
was lower than expected" - which refers to disappointing early sales for games such as Call of Duty: Infinite Warfare, Titanfall 2 and Dishonored 2.

However, the firm has managed to offset this slightly thanks to its new business areas, and the success of its Spanish operations. Events, eSports and digital saw GTV growth of 80% over the 23 week period, while new retail categories including VR, digital content and PC gaming accessories grew by 31%.

In Spain, GAME saw sales growth across its retail categories, and with the help of the weaker pound, GTV growth was 29%. The company also called out sales of Pokemon Sun and Moon, plus a strong Black Friday performance, as successful areas for the business during the period.

GAME's cash reserves have fallen, although they are still significant. The firm has £68m currently (£105m this time last year) and access to a further £100m in available facilities. The firm expects to spend £2m on rolling out a further 20 'Belong' stores. These are the GAME outlets announced last year that feature large in-store play areas, where consumers are asked to pay-to-play.

Elsewhere, GAME reiterates it plans to have saved £5m from its UK retail operations. This will mostly come from renegotiated leases, distribution efficiencies and marketing spend.

Early pre-orders for Nintendo Switch are strong amongst customers, GAME says.

The company offered no update to its full year guidance. Its half year update is due on March 29th, 2017.

"Trading conditions in the UK video games market remain tough, with lower console sales, and we continue to take appropriate actions to respond to these market dynamics and to reposition and transform the business," said CEO Martin Gibbs.

"Overall demand for new games released in the period was lower than expected but we were pleased with the Group's performance over the peak weeks of Black Friday and Christmas, with GTV excluding lower margin hardware sales up 2% year on year. Furthermore, over the period we continued to deliver significant operational efficiencies and cost savings whilst achieving strong growth in our new retail categories and new businesses. We remain focused on achieving further progress against these key strategic priorities in the year ahead.

"We have been pleased with the customer reaction and initial performance of our new in-store gaming arenas, under our new Belong brand. We have also continued to see the broadening of our partner base and growing support for this strategic initiative. As a result, we have taken the decision to extend the roll out of this exciting new proposition, ensuring that we can bring the opportunity to play, experience and compete through us, both in store and online, to as many gaming fans as possible.

"Looking ahead, we are encouraged by the strong consumer anticipation which is building for the launch of the Nintendo Switch console in March this year, and beyond that to the launch of Xbox's Project Scorpio later in the year. We expect these new consoles to drive interest and activity in our core console markets, as well as open up new growth opportunities for our business."