Game Group's holiday sales drop 14.7% after 'incredibly tough' year

UK retailer Game Group reported a 14.7 percent slump in video game software and hardware sales during the holiday season, after suffering what it called "an incredibly tough 2011." The company's problems are tied to a general weakness in the UK's retail games market, which has seen three consecutive years of sales decline, according to a report from the Association for UK Interactive Entertainment (UKIE). Last week, UKIE estimated that total sales for the industry dropped 13 percent year-over-year to £2.52 billion ($3.9 billion) in 2011. The last year the country saw revenue growth was 2008, when retail sales reached £4 billion (6.1 billion). In the eight weeks leading to January 7, Game Group saw sales at its UK and Ireland locations drop 14.7 percent, and at its international stores 12 percent. Online sales grew by 3.9 percent, but total sales still reflected a 14.7 percent dive. Game Group said that while its full-year sales are forecasted to be "no better than -10.3 percent," its performance is ahead of the overall games market, which is at less 13.1 percent for the 49 weeks leading up to January 7. And while the company shut down nearly 40 stores in 2011, it expects to close a lot more -- by 2013, it hopes to do away with 60 more locations in the UK to cut operating costs, bringing its total shop count down to 550. "Our industry had an incredibly tough 2011, and so did we," says Game CEO Ian Shepherd. "We remain the market leader and have a clear strategy which will return the business to growth. We are adapting to the changing market and are well prepared for the next hardware cycle."