Almost half of the Game Group’s stores are closing this week with the loss of more than 2,000 jobs. Administrators are talking to potential buyers but said 277 of the group’s 609 stores in the UK and Ireland still had to close.
Mike Jervis and Stuart Maddison of PricewaterhouseCoopers, were yesterday appointed the joint administrators of the company. PwC said in a statement that “a number of parties” had “expressed an interest in purchasing part or all of the business and assets of the group.”
Despite this it was still necessary to close 277 stores across the UK in view of the “ongoing operational requirements of the business and with the continued difficulties on the high street,” making 2,074 people redundant this week.
Mike Jervis, joint administrator and partner at PwC said: “Our priority is to continue trading the business as normal while we continue to pursue a sale. The recent job losses are regrettable but will place the company in a stronger position while we explore opportunities to conclude a sale. My team and I will be doing all we can to help the affected employees at this difficult time.”
The remaining 333 stores employing 2,844 people will stay open as normal.
The multichannel games and consoles retailer, which trades under the Game and Gamestation brands, announced yesterday that it had called in the administrators following unsuccessful discussions with its lenders and third parties. In total, 5,136 people worked in its 609 UK and Ireland stores with 385 in its Basingstoke head office. The £1.6bn turnover company also has operations in Spain, Portugal, France, Czech Republic and Australia.
“This decision [to call in the administrators],” said Game Group in a statement to the City, “is taken after careful consideration and ceaseless interrogation of every possible alternative. The board would like to thank the teams of Game and Gamestation colleagues around the world for their exemplary dedication, passion and professionalism.”
PWC’s Jervis said the group had faced serious cashflow and profit issues over the recent past. He added: “It also has suffered from high fixed costs, an ambitious international roll-out and fluctuating working capital requirements.
“Despite these challenges, we believe that there is room for a specialist game retailer in the territories in which it operates, including its biggest one, the UK. As a result we are hopeful that a going concern sale of the business is achievable.”
The Game and Gamestation websites continue to be down this morning and there is no news on when that will change. Messages on both said that existing orders were being processed and reviewed, and invited customers with outstanding orders to get in touch by email. “We apologise for any inconvenience this may cause and we hope to be back up and running very soon,” the message said.
The appointment of administrators brings to an end Game Group’s ambitions to reinvent itself for a multichannel future. The company had been looking to adapt to a digital vision of the future that would include online and cloud-based gaming. Its sales of digital products were growing but in the meantime sales for its PC and video-based games had fallen.
Interim results released last September showed a 40% rise in digital sales in the half-year to July 31. But, like-for-like sales were down by 9.9% in the period and turnover fell to £558.8m from £624.6m at the same point in the previous year. Pre-tax losses had also widened to £51.5m from £21.5m previously.