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Game Group to offload overseas shops as UK sales plunge

Struggling video game retailer announces £18m loss for the year – but reaches new agreement with lenders

The struggling video game retailer Game Group has been given a lifeline by its banks after agreeing to sell its overseas stores.

Game, which has issued a series of profit warnings in the past year as sales have plunged, said it had agreed to operate within lower lending limits after talks with its lenders and would now meet its banking covenants at the end of this month. It said on Friday that it would make an £18m loss for the year to 31 January.

The group, whose lenders are led by RBS, also agreed to provide an “updated strategic plan for review and approval, in part, by the lenders”. This will include a review of its overseas operations, which include hundreds of stores in France, Spain and Australia.

Game has been hit hard by online competitors and has had to discount heavily to attract customers, in turn affecting margins. Last month it warned that a disastrous Christmas trading period, when sales fell 15%, meant it might breach its banking covenants. It operates 610 stores in the UK but has already announced plans to close 60 of them.

Online competition means that the company has failed to cash in on the huge popularity of games such as Call of Duty, the new edition of which racked up bn of global sales within just 16 days of being released in November.

However, Game hopes that next month’s European launch of the PlayStation Vita will provide a sales boost for the whole games market, with that console to be followed by Nintendo’s new Wii U later this year. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds