Investors weren't buying Game Group's spin that the thumping half-year loss was merely the return to a "traditional seasonable trading profile" - shares slumped 12 per cent on the half-year figures, as the group admitted that it had sacrificed 290 basis points of gross margin to hang onto market share.
But new chief executive Ian Shepherd was unperturbed by the underwhelming trading performance, which he said was more a reflection of the cyclical downturn in the gaming market than any weakness. And he's confident that an "eye-poppingly congested" release pipeline - including new motion sensing peripherals and titles including FIFA 2011 and the latest instalment of Halo - will see like-for-like sales improve steadily throughout the year and deliver the second-half profits the group needs to meet market expectations.
Despite the management upheaval seen at Game earlier in the year, Mr Shepherd was also insistent that the group is in good shape, financially and in terms of its retail offer. "Is this a business in need of repair? Anything but", he said, adding that tight discipline over costs and working capital had given the board the confidence to maintain the dividend payout.
Broker Seymour Pierce expects full-year pre-tax profits of £50m and EPS of 10.3p (from £93.1m and 20p in the year to January 2010).
GAME GROUP (GMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58p | MARKET VALUE: | £201m | |
| TOUCH: | 57-58p | 12-MONTH HIGH: | 171p | LOW: 58p |
| DIVIDEND YIELD: | 10.0% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 85p* | NET DEBT: | 22% | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 691 | 10.8 | 2.23 | 1.88 |
| 2010 | 625 | -21.5 | -4.44 | 1.88 |
| % change | -10 | - | - | - |
Ex-div:20 Oct Payment:18 Nov *Includes intangible assets of £178.7m, or 51p a share | ||||
