Game Group, the embattled video games retailer, conceded defeat today by collapsing into administration, leaving 6,000 UK retail jobs hanging by a thread.
The administration of Game, which has 610 UK shops, is the biggest for a listed retailer since Woolworths collapsed in November 2008, although talks with its banks are continuing and parts of the group may be rescued out of administration.
Game, which employs a further 4,000 staff overseas, was unable to meet a £21 million second-quarter rental payment due yesterday and has appointed the accountancy firm PwC as administrator.
The retailer’s syndicate of six banks have proposed rolling over £85 million of debt in Game in the hope that a radically slimmed-down version of the business has a future. Discussions are being led by Royal Bank of Scotland, the taxpayer-owned lender, which is owed £26m. However, such a deal would be hugely complex and would require the banks to inject fresh funds into Game, which also has 663 shops overseas, partly to address working capital requirements and appease suppliers.
Others parties, including the world’s biggest video game retailer GameStop, and the distressed investment firm OpCapita, have registered an interest in acquiring parts of the UK business.
Even if Game is rescued out of administration at least half of its 600-plus UK shops are likely to eventually close.
Game's chief executive, Ian Shepherd, has always maintained that Game was not “structurally challenged” but was merely battling a tardy pipeline of blockbuster releases and a downturn in consumer spending. However, the more widely held view is that Game has been battered by the inexorable shift to digital downloading and cut-throat competition from the online specialist Amazon, as well as the big supermarkets selling gaming products.
Three big suppliers – Electronic Arts, Capcom and Nintendo – have withheld their latest products from the retailer in recent weeks, including EA’s Mass Effect 3.
Game made an estimated loss of £18m in the year to January 31, Its like-for-like sales in the UK and Ireland plummeted by 15.2 per cent for the eight weeks to 7 January.
