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RetailX Brand Index 2019

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THIS WEEK IN PEAK On the latest figures from the ONS, Game Digital and N Brown Group

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Game says that while its Christmas sales were down, they were more profitable
Game says that while its Christmas sales were down, they were more profitable
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THIS WEEK IN PEAK On the latest figures from the ONS, Game Digital and N Brown Group

In today’s Week in Peak round-up, we report as the ONS releases its figures for December, and we round up the latest figures from Game Digital.

 

Online sales up in December

Online sales grew in December compared to the same time last year and compared to the previous month, according to the latest ONS figures. But falling store sales between November and December 2018 look to have fuelled a drop in overall retail sales last month, compared to the previous month. We report in more detail on this story here.

 

Game Digital: sales dip but profitability stays on track


Game’s group sales slightly fell over Christmas and in the first 23 weeks of its financial year, pulled down by its performance in its home UK market. But the gaming specialist said that the sales it did make were more profitable than those it made last year thanks, in part, to a focus on improving its multichannel processes.

 

Total sales were down by 0.5% over the seven weeks of its Christmas trading period, to January 5, and by 0.6% in the 23 weeks to the same date, according to the retail group’s Christmas trading statement. Like-for-like sales, however, which strip out the effect of store openings and closures, were more positive at +2% over the seven weeks to January 5 and +1% in the 23 weeks to the same date.

 

But its UK LFL sales (-0.3% in the seven Christmas weeks, +1.1% 23 weeks) were notably weaker than its Spanish sales (+4.8% over Christmas, +2.1% in the 23 weeks).

 

The retailer said that although lower, its Christmas sales were more profitable, with an improved trading margin rate reflecting both higher sales of more profitable products, such as exclusive new software releases, licensed merchandise and PC accessories, and a reduction in its use of discounting. It also said improvements to its multichannel offer, online customer journey and delivery options had made it more profitable to sell online and to grow its online market share. It expects full-year results to be in line with expectations.

 

It now plans to continue its strategy of focusing on specialist retail sales, while expanding its Game Reward and Game Elite loyalty schemes, with new initiatives planned for the spring. It’s also continuing to focus on the experiential side of its business, through the expansion of its in-store gaming Belong arenas. It said pay-tp-play sales were driving growth, while it has also completed work on Belong customer profiles that will help as it develops new arenas and competitive gaming tournaments. It held its first Insomnia international gaming event.


Behind the scenes, it’s focused on cost-saving, and is negotiating with landlords across its store estate. It now has an average of less than one year to the earlier breakpoint in its store contracts as it looks to take a flexible approach to reshaping its store estate and rolling out more Belong arenas.

 

Game Digital chief executive Martyn Gibbs said the group had traded solidly over Christmas.

 

“The group successfully delivered growth from exclusives, higher margin categories and our specialist customer offer over the Black Friday event, which all contributed to a pleasing margin outcome and helped to offset the continued, managed decline of preowned.

 

"Our multichannel focus has delivered both trading margin growth and cost savings, while paid for services, such as multiple delivery options, have been well received by customers.

 

"Our supplier partners provided a strong line-up of exclusive content for key software releases over the 23 weeks and customer response and sales have been positive.”

 

"The cost transformation programme enacted two years ago in the UK has gathered pace, enabling the Group to respond well to market changes and the economic uncertainty. We are working closely with landlords to manage down the fixed costs of operating our store portfolio and produce ongoing efficiencies.”

 

N Brown Group: sales grow online but fall offline

 

N Brown Group, the home shopping retailer behind value and plus-size fashion including its ‘power brands’ JD Williams, Simply Be and Jacamo, said its sales had fallen back in the third, Christmas, quarter of its financial year. The retailer is now focused on digital, while managing the decline of its offline business.

 

Group sales were down by 1.6% in the 18 weeks to January 5, after rising by 1.5% in the first half of its year. During the quarter, sales held up for its power brands both online (+6.4%) and across all channels excluding stores (+0.1%). But sales were down at its secondary (-5.2%) and traditional (-22.9%) brands, which trade primarily through catalogues, with orders placed by post and over the phone. Digital sales accounted for 78.5% of sales during the period – up from 71% a year earlier. Its financial services also grew, by 9.7% in the quarter, as shoppers took out credit to buy.

 

Chief executive Steve Johnson said: “The group delivered robust online power brand growth and a stable margin performance in what was a challenging and highly promotional peak trading period. We continue to manage the anticipated decline of our legacy offline business and remain focused on improving our customer proposition to drive profitable online growth. Trading over the Cyber and Christmas periods was relatively consistent and in line with our expectations, with the group benefiting from a more targeted and efficient approach to its promotional activity. Our transformation into a digital retailer continues, with total online Power Brand revenues increasing by 6.4% during the period. The Group’s digital sales now account for 78.5% of Product revenue compared to 71.0% for the same period last year.”

 

Johnson said the group’s full-year outlook remained largely unchanged. “Encouragingly, despite the highly promotional retail environment experienced during the period, the group is maintaining its product gross margin guidance at between 0 and -100bps [base percentage points] for the full year,” he said.

 

Image: InternetRetailing Media/Paul Skeldon

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