The UK’s biggest games retailer has buckled under the weight of its debts.
Having endured months of instability and stock problems following the loss of its credit insurance at the start of this year, The Game Group has now “entered into administration” (which is British money-speak for “has gone bankrupt and is now being rebuilt by a third party”). Lead administrator Mike Jervis of restructuring firm PriceWaterhouseCooper (PWC) has been appointed to oversee the restructuring of the Group’s GAME and Gamestation businesses with a view to reselling them at a later date, leaving the futures of the company’s 6,000 British employees uncertain until PWC completes its work.
Additionally, the GAME website, game.co.uk, has been reduced to a “down for maintenance” notice which tells us that orders currently placed on the site are being reviewed and processed.
The Group’s CEO, Ian Sheperd, stepped down this morning. In an internal memo obtained by MCV, he told employees, “I’ve said a number of times that the administrator, once appointed, takes charge of the business…[Jervis] will have a lot to do very quickly. Let’s be clear, he will certainly make big changes, both to the store estate and in the office, but will be doing so with a view to creating a trading business that he can attract a buyer for.”
“As I’ve said before, the business is worth more trading than not,” continued Shepherd. “It’s going to be a difficult week for everyone, but the best thing you can all do is support [Jervis] and his team, and do your best to help create the most positive outcome you can.”
“The best thing we can do now is demonstrate clearly, to an administrator and to potential buyers, that this is a great business filled with great, committed people. We have a rocky road ahead, but this is not the end for this business on the High Street. Stay with it,” concludes Shepherd’s memo.
Unfortunate as it is, it wasn’t difficult to predict that The Game Group wouldn’t make it through this week in one piece. It became apparent last week that the company would need in excess of £180 million ($286 million) to cover its end-of-the-month payments for March and that any prospective buyer would need to be willing to cover that bill almost upfront; at the time, the chances of these requirements being fulfilled were rightly designated as being fairly slim. Rumors of buyouts came and went, including a rumor of potential interest from GameStop which was snuffed out by that company’s disinterest in GAME’s Australian operations.
If PWC can remold GAME and Gamestation in a way which takes advantage of the gaps which remain between indie stores and non-specialized games retailers, we could see something of a comeback; in the meantime, however, there is no doubt that the uncertain future of the business will be laying heavily on the shoulders of its thousands of employees.
UPDATE: As reported by the BBC, PWC has clarified that it will be closing 277 GAME and Gamestation stores in Britain with immediate effect. This means that 2,104 employees will be made redundant before the end of this week.
At the time of writing, PWC intends to keep the company’s 333 other stores open while it works on further restructuring and searches for a buyer.
Published: Mar 26, 2012 02:35 pm