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| Game chain set for sale |
   
Posted Date: 03/02/2012
By Robert Stockdill
Game’s network of 115 stores in Australia is likely to be sold off as the UK based retail company struggles to meet its debt covenants.
Game Group plc has issued a statement in London in response to British media speculation it was considering selling its international operations.
“Game Group confirms that it is in ongoing dialogue with its lending syndicate to reach agreement on revised terms for its facilities. As part of these discussions, the lending syndicate is reviewing a strategic plan of the company which includes a review of its overseas operations,” the company said, revealing no other details.
Game has 1400 stores worldwide, although Australia is the only market outside Europe in which is operates most likely placing it at the top of the list of sale options. The rest of its 670 international stores are in Sweden, France, Spain, Portugal and the Czech Republic.
Its international division is reported to have lost £15.7 million over the last year, but the figures do not break out the performance of the Australian stores.
Likely buyers would include JB Hi-Fi or EB Games.
Game’s move to restructure its debt comes just three weeks after it revealed a heavy 12.9 per cent like for like slump in sales in the key Christmas trading period. Its UK and Ireland arm’s sales fell 15.2 per cent in the eight weeks to January 7, while the international division declined 11.4 per cent.
At that point it said it was current compliant with its loan covenants, but warned that there was an increasing chance it will not meet its EBITDA covenants when they are tested at the end of February.
However on Friday night (AEST) Game release a further statement saying it would now meet that test and had come to an arrangement with its lenders that woudl allow it to continue to trade.
“Under the terms of the revised facilities, the group has agreed to operate within lower limits of its existing facilities than was previously available. These revised facilities will allow the company to continue to trade.”
However this new arrangement does not appear to affect plans to divest foreign operations.
Computer game retailers’ fortunes are largely dictated by the release pipeline of game manufacturers, creating a cyclical trading environment. But in recent years the category has witnessed a huge shift in customer behaviour with an increasing share of sales going online.
There is nothing tactile about the experience of buying a computer game in a physical store when a player can download a working sample on his computer or view a YouTube preview of both hardware and software. Such consumers know what they want without walking into a bricks and mortar store. |
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