Flagging demand for older games and consoles offset brisk trading elsewhere at Game Digital (GMD) in the year to 23 July. Gross transaction value fell 5 per cent at the video game retailer, sending adjusted cash profit down 42 per cent to £27.2m.
According to management and analyst figures, underlying sales of hardware and previous-generation titles fell by 22 per cent and 58 per cent, respectively. In contrast, they rose by more than a tenth for digital content, pre-owned smartphones and tablets, and accessories and events. These newer offerings generated over 32 per cent of total gross profit, up from 27 per cent.
Management agreed better terms with the group's top 30 suppliers, securing more exclusive game titles and cross-selling income from gaming events. It also renewed 28 store leases at lower rental rates. In addition, it unearthed £6.2m in annualised cost savings from its property, payroll and procurement efforts, and a further £3m is anticipated this financial year.
The group should benefit from a flurry of console launches in the coming months. Broker Liberum expects adjusted pre-tax profit of £9.6m for the year to July 2017, giving EPS of 5.2p, down from £16.4m and 8.9p in FY2016.
| GAME DIGITAL (GMD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 70p | MARKET VALUE: | £120m | |
| TOUCH: | 70-72p | 12-MONTH HIGH: | 248p | LOW: 60p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 74p* | NET CASH: | £38.5m | |
| Year to 28 Jan | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.11 | -140 | na | na |
| Year to 30 Jul** | (£m) | (£m) | (p) | (p) |
| 2013 | 658 | -15.4 | na | na |
| 2014† | 862 | 7.3 | 13.0 | nil |
| 2015 | 867 | 25.8 | 12.7 | 14.7†† |
| 2016 | 823 | 4.9 | 3.3 | 3.42 |
| % change | -5 | -81 | -74 | -77 |
Ex-div: 29 Dec Payment: 10 Feb *Includes intangible assets of £56.7m, or 33p a share **Years to 27 Jul 2013, 26 Jul 2014 and 25 Jul 2015, and 53 weeks to 30 Jul 2016 †Game Digital listed in June 2014 ††Excludes special dividend of 14.7p a share, paid in April | ||||
