Search Share Prices
Game Digital revenues jump on increased sales of Nintendo Switch
High street retailer Game Digital saw gross retail sales rise across the whole group during its peak holiday trading period, with margins lower but expected to level off as increased cost savings are targeted.
Gross transaction values, a measure of total revenue before deferring the proportion for loyalty points, for the 23 weeks leading to 6 January increased 3.8% and was 5.2% higher for the peak period from 1 November to 6 January.
UK retail GTV jumped 2.95% and Spanish retail GTV gained 6.3% over the peak period.
The solid increase revenues was the result of a 25.8% increase in peak sales of lower-margin hardware, such as the Nintendo Switch, continued adoption of the PlayStation 4 and the launch of the Xbox One X, leading to overall margins for Game's first trading half to be down approximately 100 basis points. Management expects to offset this through cost savings in excess of the £4m previously targeted.
Group cash sat at £67m at the end of the calendar year, up from the £43m a year earlier, and there was aggregate banking facilities of approximately £86m across the UK and Spain.
Positive developments within e-sports and events, such as the Call of Duty World League, led to continued exposure for the firm, said chief executive Martyn Gibbs.
"This positive sales performance for our Peak Trading Period was driven by our ability to capitalise on the strong customer demand for Nintendo Switch, the continued adoption of PlayStation hardware and VR sales, the launch of Microsoft's Xbox One X and a more appealing line up of new software titles compared to the same time last year."
"Over the peak period, Game focused on its core trading in all channels across both its geographies in highly competitive markets whilst delivering further cost savings in UK Retail and made good progress with its strategic initiatives. These additional cost savings mean our performance remains on track; as ever our full year result will also be subject to continued availability of consoles, such as Nintendo Switch, and the timing and success of new game releases."
BrokerCanaccord Genuity reiterated their 'hold' rating and 40p price target on Thursday morning.
"We think that this is a decent performance from Game, with management's strategy on track. Clearly, momentum from Nintendo Switch has been a big factor, but we think this should continue. The new games pipeline is encouraging and this should feed through into stronger pre-owned sales over time," analysts noted.
As of 1015 GMT, shares had gained 0.12% to 60.47p.