Game Loses Value As First Half Profits Fall

Shares in Game Digital fell 7% on opening after the video games retailer posted a fall in sales and profits.

The company, which had issued a profits warning in January on the back of strong Black Friday discounting ahead of Christmas, reported a 16% drop in first-half adjusted core profit to £43m.

Sales in the 26 weeks to 24 January fell marginally to £582.1m.

Game Digital also confirmed its chief financial officer Benedict Smith would step down in July to move to a private equity-backed firm and the search for a successor had begun.

Game Digital, which went public in 2014 after it was bought out of administration by the investment group OpCapita, is battling strong competition in the mobile gaming sector and has suffered from a lack of major releases.

The company expected trading to pick up from Easter and new releases in the coming weeks include Metal Gear Solid V and Mortal Kombat X.

Martyn Gibbs, Game's chief executive, was upbeat in his summary.

"The video games market remains dynamic and competitive," he said.

"While we experienced some challenging conditions over the Christmas trading period, we are confident that our strategy of focusing on customer recruitment, combined with the significant and growing number of Xbox One and PlayStation 4 owners across our two major territories, provides a solid foundation from which to drive growth over the medium term.

"In the coming weeks and months we can look forward to a solid line up of new physical and digital games launches. Our pre-order rates on the major titles are encouraging and we have secured exclusive editions on many of the key titles.

"We continue to manage the business prudently, balancing the need to fund growth with the discipline of returning excess capital.

"In this regard, I am pleased to announce the group's intention to return £25m to shareholders by way of a special dividend, in addition to our maiden interim dividend of £12.5m".

Ahead of today's results, Game Digital shares were down 33.6% in the year to date but up 29% since its flotation.