Game Digital share price drops after 77.3 per cent dividend slash and pre-tax profit fall

 
Francesca Washtell
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Game Digital offers game across Wii, PlayStation, Xbox, PC and digital platforms (Source: Getty)

Video game retailer Game Digital's share price dropped almost nine per cent after it released its half-year results and announced a 77.3 per cent cut in its interim dividend.

The figures

Game Digital's pre-tax profit in the half year to January fell 32 per cent to £22.5m. Revenue was down six per cent to £549.2m and the company announced it had cut its interim dividend by 77.3 per cent as a result.

Although the company's UK business took a hit, trading in Spain fared better with like-for-like sales growth of 16.1 per cent reported during the period on a constant currency basis.

The company's share price plunged almost nine per cent following the release of its results.

This adds to the 63 per cent drop in share price since the beginning of the year, which followed a 42 per cent drop in one day on 23 December after it issued a previous profit warning.

Game Digital Game Digital | mobile image

Why it's interesting

Game Digital has been in a precarious position since its profit warning in December and the group was one of the first retailers to issue such a warning related to Christmas trading.

However, it still maintains that trading in the second half of the year has been "in line [with] expectations" and, despite "challenging" conditions in the first half it still expects to deliver "a small, positive Ebitda" for the 27-week period ending on 30 July.

What Game Digital said

"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," chief executive Martyn Gibbs said.

"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 focussed on driving improvements in the consumer proposition and realising operational efficiencies to improve our performance."

In short

Another blow to the Britain and Spain-based retailer, but strong customer engagement (870,000 new customers signed up to loyalty programmes in the first half of the year) could provide a base for higher profits in future.

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