Press releases
Trading statement accelerated Sainsbury roll-out and launch of internet sales
24/11/1999
At the time of the announcement of our interim results on 19 October 1999 we reported the reduced retail price of PlayStation software. Over the five weeks since that announcement a number of key titles have been released which have reinforced the ongoing retail price point at £29.99 rather than the £34.99 to £44.99 range which had been established over the last three years.
Although the overall market for our product range continues to grow very strongly, with unit volumes currently up approximately 25 per cent on last year, this exceptional price pressure on the now mature PlayStation platform (PlayStation software accounts for approximately 30 per cent of our total sales) will make it difficult for the Company this year to achieve a gross margin percentage similar to that achieved last year. At this stage there has not been a counter-balancing increase in like-for-like sales volumes. The Company is currently experiencing a reduction in gross margin of six percentage points and, whilst improving, gross margin is unlikely to be materially restored during the crucial Christmas period.
The Board's response to the intense pricing pressures on PlayStation products has been to take effective measures to consolidate our leading market position. This objective is being achieved. By offering best all round value we expect to emerge from this difficult trading period with an even greater share in and influence over the future of our industry. Whilst this strategy is likely to adversely affect short term results, current generation PlayStation software will represent a much reduced share of EB's total revenue next year. In the meantime our ability to withstand these difficult trading conditions has been enhanced by the increased scale provided by the acquisition of the GAME stores, which, following completion of the successful integration programme, are now trading in line with the EB branded stores.
The Board expects to release its review of trading over the Christmas season in the week commencing 10 January 2000.
Accelerated J Sainsbury roll-out
Following successful trials of racking our product range at eight Sainsbury and Savacentre stores, EB is to extend this programme to a further 25 Sainsbury Group outlets over the next 14 days.
Launch of internet sales
The new EB and GAME internet sites, including on-line retail, will be launched on 1 December 1999. The Web addresses will be www.eb.uk.com and www.game.uk.com respectively.
