Shares in UK high street video-game seller Game Digital (GMD) are bucking the generally weaker trend in retail stocks today, up 4% to 28p after the firm reported upbeat first half results.

Pre-tax profit rose 20% to £14.8m for the six months to 27 January while earnings per share rose 30% to 7p against 5p the previous year.

This was despite a 4.7% drop in overall sales to £430m as a result of what the retail industry customarily refers to these days as a ‘challenging’ environment.

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While sales of games hardware such as consoles were down 9% in the first half and sales of pre-owned games were down 20%, sales of new games - both on disc and as digital downloads - are still rising.

Gross transaction values in digital gaming were up nearly 22% and sales of games on disc have been helped by ‘exclusives’ on most new releases last year.

Also sales of higher-margin accessories ranging from headsets to controllers to tokens for players to spend in online games were up just over 9% in the first half.

As the gaming market evolves it goes through cycles and Game believes it is at the low point of the current console cycle ahead of the launch of the new Playstation next year.

Part of the firm’s response has been to take out fixed and variable costs from its store network including negotiating rent reductions with its landlords, where it has had some success.

Another part is a bet on gaming ‘arenas’ as a way to tap into the rapid growth in e-sports and in its ability to draw in large audiences. The e-sports business within Game, called BELONG, lost £1m in the first half of the year due to fewer events but it is pushing ahead with two new arenas and an increased number of stations at its existing sites.

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