Local arm of video game retailer Game now placed in administration
Monday, May 14, 2012/
The local arm of British video game retailer Game has been placed in administration, weeks after the European division of the company was rescued by a private equity company.
It is understood the local arm had been searching for a buyer after its British parent company had collapsed.
According to documents filed with the Australian Securities and Investments Commission, TGW Pty Ltd, which trades as Game, has been placed in external administration.
In a statement, PWC partner Kate Warwick confirmed the appointment and said stores will continue to trade as close to a “business as usual” mode, “whilst we get a clearer understanding of the current state of the business”.
“Prior to our appointment, the company’s management had been exploring interest in investing in the business with a number of parties and we will look to see whether this interest can be harnessed to continue the business or part of it through the voluntary administration process.”
Warwick said while it is still investigating, some factors leading up to the appointment could include the administration of the parent company, and an ambitious roll-out plan amid soft retail conditions.
Warwick also said the company is working on a scheme to help customers who hold credit through loyalty programs and vouchers.
According to Game’s latest financial report, the Australian division recorded turnover of $33 million. It operates 1,300 stores worldwide, but the local arm employs about 500 people in 94 stores.
The company was contacted this morning, but no reply was available prior to publication. Its head office was also contacted, but several lines appeared to be unmanned. Stores referred SmartCompany to the company’s customer relations team when queried about the state of the business.
The administration comes after a tumultuous few months for the company. The British parent company had been delisted from the London Stock Exchange and placed in the hands of administrators after running out of cash to pay rent and suppliers.
The British business escaped administration through private investment firm OpCapita, which specialises in turnaround operations.
However, the fate of the Australian arm remained unknown as the local managing director, Paul Yardley, searched for a buyer. Last month, he said it was up to the local managers to decide on a buyer.
The fate of the chain comes during a period of huge growth for the video game market. Video games were hailed as the fastest growing market in the PwC Media Outlook report in 2012, with revenue predicted to reach $2.5 billion in 2015 from $1.6 billion today.
Retailers such as JB Hi-Fi have helped boost sales by amping up their packaged game offerings, while Harvey Norman also attempted to get in on the action last year with an online offering.
However, the industry is facing troubles as shoppers opt for imports and digital downloads of games instead of retail copies – both of which are often significantly cheaper than buying local.
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