Game Digital still can't stop the rot

Game Digital still can't stop sales and profits falling.

After a profit warning at Christmas - its second in two years - Game on Wednesday put out a set of dreadful half-year results covering the 26 weeks to January 24. Here are the key points:

• Revenue: Down 6.3% to £549.2 million;
• Pre-tax profit: Down 32.2% to £22.5 million;
• Gross transaction value (basically sales): Down 5.6% to £608 million;
• Profit margin: Up 70 basis points to 23.8%.

In short, sales and profits are falling but the company is managing to squeeze the pits and get more profit out of what it is shifting. Game blamed a "challenging UK market."

Adjusted earnings of £33.1 million are above January's forecast of £30 million, but way below last year's figure of £43 million.

CEO Martyn Gibbs says in Wednesday's statement:

Operating in the fast-paced video games industry continues to present both opportunities and challenges to our business. Market dynamics in the UK were challenging during our peak trading period, although sales trends improved in the last week of December and first three weeks of January.

In January we launched a review of the UK business and are committed to rapidly implementing measures to respond to current market trends. As well as pursuing commercial opportunities we are focused on driving improvements in the consumer proposition and realising operational efficiencies to improve our performance. In Spain the Group delivered another strong performance in the first half, with increased sales, profits and market share.

Game shares dropped almost 40% in December after its profit warning and haven't recovered since. On Wednesday, they're down just over 3%.

Game fell into administration in 2012, with the BBC reporting at the time that it was hit by "hit by competition from online-only retailers."

Controversial buyout firm OpCapita, which was hauled over the coals for profiteering from the collapse of electrical retailer Comet, bought the company out of administration.

The chain ended up in the hands of another controversial fund - Elliott Advisors, a UK subsidiary of US hedge fund Elliott Management that has been criticised for turning the screws on Argentina over bond payments.

Elliott floated Game in June 2014 at a value of £340 million ($505.2 million), netting Elliott an estimated £101 million ($150 million), according to the Financial Times.

But Game has struggled with two Christmas profit warnings since its float at Wednesday's share price of 122.25p is well below the £2 a share price Game was floated at almost two years ago.