Festive flop hurts Game
Christmas failed to bring any cheer for retailer Game Group as the continuing slump in the computer games market saw a further slide in its sales.
Game shares fell more than 6% after the firm revealed worse than expected sales figures and said profits for the full year would be below City forecasts at between £87m (€97m) and £93m (€103.6m) – although this would still be its second best annual figure.
Like-for-like sales in the UK and Ireland were down 17.5% in the five weeks to January 9. This represents a deterioration from the 16.8% decrease in the 49 weeks to January 9.
Group same-store sales were down 13.8% over Christmas, with sales from its international business outperforming the UK and Ireland. This was an improvement from the 14.8% seen across the year so far.
The numbers will come as a disappointment to analysts who had pencilled in a stronger improvement in the company’s sales declines, with some expecting high single digit same-store falls.
Christmas is a crucial selling period for Game, with the general festive period accounting for around 25% of its sales.
The chain’s recent third quarter trading update was very badly received, as it revealed that price cuts by supermarket rivals had hit pre-Christmas figures.
“The negative trends in the PC and video games market, outlined in our previous trading statement, continued over the key Christmas selling period despite strong software releases and a sizeable installed base of hardware,” the firm said today.
Game, which is up against a tough comparative period, said it had also been affected by a trend for customers to shop later.
But it said since Christmas it had seen “significant improvement” as a result of offers on new and pre-owned games and software releases.
Looking ahead, the Basingstoke-based firm said it anticipated new technology releases would lead to benefits, as consumers seek expert product advice.
Both Microsoft and Sony have announced plans to launch new motion sensing technology, with the former looking at a release for the Xbox360 this November.
Video game releases planned for the first half include 'Mass Effect 2', 'Splinter Cell: Conviction', 'Bioshock 2' and 'God of War 3'.
Game said it also expects the market to continue to move towards higher margin software and new peripheral technology.
“The board remains mindful of the uncertain macro-economic environment and the trends in the PC and video games market,” the firm said.
“This combination of factors means that revenues are likely to decline year-on-year but our sales mix will continue to move towards higher margin new and pre-owned products.”
Freddie George of Seymour Pierce said Game’s Christmas trading was worse than expected.
He reduced full year pre-tax profits forecast from £100m (€111m) to £90m (€100m) following the statement.
“The stock will remain ’under a cloud’ until we start to see some positive momentum in revenues,” he added.
