Game Digital has said that full year revenue is expected to edge down and profit will continue to come under pressure as it renegotiates store leases with landlords.
In a year end trading update, the group said that statutory revenue for the 52 weeks to July 28 is set to fall from £782.9 million to approximately £780 million.
Game added that “challenges in the pre-owned business”, or second-hand video games, have impacted its overall gross profit rate.
The group’s total gross transaction value for the year increased by 1.8% to £907.2 million but dropped 1.6% in the second half to £320.4 million.
But it was boosted by strong sales of lower-margin digital and hardware and new “quality” releases such as God of War 3.
Game also said that “significant progress” has been made on reducing fixed and variable costs across the UK store estate, via a lease renegotiation programme and a reorganisation of the head office and distribution centre teams.
Several retailers have asked landlords for rent reductions this year as the high street comes under intense pressure amid falling consumer spending and soaring costs.
Game gave no further details of the restructure but chief executive Martyn Gibbs hinted at further cost cutting.
“We have made further progress in the second half of the year to right-size the UK retail business by reducing the cost base, whilst capitalising on all market opportunities to address the challenges and changes in the UK retail market.
“This review of costs will continue into the next financial year,” he said.
Game’s high-margin gaming experiences business, or e-sports, is gaining traction after striking a deal with Mike Ashley’s Sports Direct in February, the firm claimed.
The tie-up with Mr Ashley, who holds a large stake in the retailer, will see Game launch 100 Belong e-sports arenas within three years, some of which will be set up in Sports Direct stores.
The first opened in Westfield Stratford this month, with a second arena in Lakeside Thurrock set to open in September.
The two arenas have capacity for 50-plus and 24 gaming desks respectively.
So-called e-sports involve professional gamers battling it out in front of crowds at events such as Insomnia.
Shares in Game were up nearly 8% in morning trading.
Mr Gibbs added: “Opening the first two arenas in collaboration with Sports Direct represents a significant step forward as we implement our strategy to increase the availability and scale of Belong, our experienced-based gaming offer and e-sports activities.
“The UK and Spanish mint retail markets continue to show growth and we expect that this momentum will continue into our new financial year and the peak trading period, driven by a strong line-up of new software releases.”