A challenging video games market has led to retailer Grainger Games dropping into the red with a pre-tax loss of £278,511, accounts have revealed.
The Newcastle-headquartered business, which sells games software, consoles and accessories through its stores and online, said the year ended March 2014 proved tough for its sector, due to a lack of any significant releases for gaming fans.
A pre-tax profit of £1.17m for the year ended March 2013, dropped to the pre-tax loss of £278,511.
According to accounts filed at Companies House for Grainger Games Ltd, that was reversed in September, through the release of Grand Theft Auto V, which helped the business to lift sales for the full year by 5.9%, from £43.9m to £46.55m.
Established in 1997, the firm has 72 stores between Berwick and Derby, and also sells through its own website and Amazon. Headcount grew in the period, from 388 staff to 419 which included the addition of 34 new retail sales staff.
While the rest of the UK video games software market fell by 2.1%, the company said its own revenues for software grew by 1% over the full year, despite the lack of high profile games on offer in the first half of the year.
A director’s report accompanying the accounts added: “The Grainger Games business enjoys a number of competitive advantages, including strong brand recognition in its heartland trading region, where it consistently achieves a market share of in excess of 20%, a well established reputation for price competitiveness and a knowledgable and enthusiastic workforce.
“The lack of any significant new titles until the release of Grand Theft Auto V in September meant that the first six months of the financial year saw Grainger Games’ like-for-like sales decline, although still outperforming the UK market.
“The market then saw improvement in the second six months of the financial year, thanks to the impact of Grand Theft Auto V , the highest selling video game title ever, together with the launch of the long awaited next generation video games consoles, the X Box One and Playstation 4.”
The change in sales mix, however, impacted on the business’ gross margins, which dropped from 28.1% to 24.3%.
EBITDA (earnings before interest, tax, depreciation and amortisation) also fell from £1.72m to £250,000.