Computer game chain frustrated by shortages
Computer games retailer Game warned today it may make only £3m (€4.4m) profits this year after suffering supply shortages for the second Christmas in a row.
Game, which has 400 stores in the UK, said deliveries of the Sony PSP handheld console had been stop-start since its debut on September 1 – frustrating its ability to meet “exceptional” demand.
Supplies of the new Microsoft Xbox 360 were also likely to be “extremely limited” following its launch on Friday, while Game said a surprise number of shoppers were shunning older consoles and software to wait for new technology next year.
Shares in Game slumped as much as 16% after the company warned that pre-tax profits before exceptional items were now expected to be in the range of £3m (€4.4m) to £13m (€19m).
This compares with £31.9m (€46.5m) during the previous year when the group suffered an “unprecedented breakdown” in the supply of PlayStation 2 consoles in the UK.
Chairman Peter Lewis said: “We are seeing weaker than expected sales of mature formats and whilst there is significant demand for exciting new products such as PSP and Xbox 360, there is a shortage of supply.
“All of this is happening in a tough retail environment.”
Like-for-like sales were known to be down 4.4% in the eight weeks to September 24 and Game told investors that it was still experiencing declines without providing specific figures.
The price of software for older models was also continuing to come down and with hardware was taking up more space in stores, Game said gross margins would be around 300 basis points lower compared to last year.
But a sudden rush of demand could bring its forecasts for the year to January 31 back up as Game generates around a third of its annual sales over the next nine weeks.
