Game over as 2,000 UK jobs axed in collapse
Retailer shuts hundreds of British stores and appoints accountant PwC as administrator
More than 2,000 UK jobs were axed yesterday, as Game Group closed hundreds of shops after the company collapsed into administration.
The beleaguered video games retailer, which had 610 UK stores, was unable to meet a £21m second-quarter rental payment due on Sunday and appointed the accountancy firm PwC as administrator.
It is the biggest failure of a UK-listed retailer since Woolworths collapsed in November 2008.
PwC moved quickly to close 277 unprofitable stores, which will result in 2,089 redundancies among Game's 5,303 UK employees this week.
The games retailer employs a further 4,000 people overseas, where it has 663 stores in countries including Australia and France.
Mike Jervis, the joint administrator at PwC, blamed "serious cashflow and profit issues over the recent past" for Game's demise. He added it had also "suffered from high fixed costs, an ambitious international roll-out and fluctuating working capital requirements".
While PwC will continue to operate the remaining 333 UK stores, the accountancy firm is thought to be working to a timetable of days, rather than weeks, to find a buyer for parts of Game.
This is the preferred option, but the retailer's syndicate of six lenders, including taxpayer-owned Royal Bank of Scotland, HSBC and Barclays, are also discussing a debt-for-equity swap.
This would involve the lenders buying parts of the UK business and hiring a management team to run a much smaller version of the chain until it can be sold.
GameStop, the world's biggest video games retailer, is interested in bidding for the rump of Game's troubled UK business. The US giant has also been eyeing its better-performing operation in Spain, as is the retail restructuring firm Hilco.
Game's fortunes of Game have unravelled rapidly this year, as its sales plummeted and major suppliers have withheld their latest games.
Ian Shepherd, Game's chief executive, who has now ceded control to PwC, has always maintained that the group was not "structurally challenged" but merely battling a slow pipeline of blockbuster releases and a downturn in consumer spending.
But the widely held view is that Game could not keep up with the surge in digital downloading. It also failed to combat the onslaught from online specialists, such as Amazon, as well as the big supermarkets.
Game filed a notice of intention to appoint PwC as administrator last week and suspended trading in its shares at 2.39p.
The retailer had posted profits of £84.21m two years ago, while its share price had been above £1 in March 2010.
Three big suppliers – Electronic Arts, Capcom and Nintendo – have withheld their latest products from the retailer in recent weeks, driven by deep concerns about Game's credit worthiness.
Game made an estimated loss of £18m in the year to 31 January, following two profit warnings either side of Christmas. Its like-for-like sales in the UK and Ireland plummeted 15.2 per cent for the eight weeks to 7 January.
The retailer's banking syndicate turned down a rescue bid for the UK business from the distressed investor OpCapita last week.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...