Shares in Game Digital have tanked in early morning trading, after the company issued a major profit warning after market close on Tuesday.
The video game retailer's share price opened 50 per cent down on Tuesday, before recovering slightly to a price of around 220p per share - a 35 per cent drop on yesterday’s closing price of 346p.
Shareholders were braced for a rocky ride on the market today after the company drastically lowered expectations in full-year earnings, citing a drop in sales over the Christmas period.
Game Digital, which made its debut on the London Stock Exchange last year, blamed a “highly competitive Christmas trading period” for a 6.7 per cent drop in group sales in the 11 weeks to January.
The company now expects flat earnings for the full financial year ending 1 August, in line with last year’s £51.3m. Analysts had originally expected earnings before interest, taxes, depreciation and amortisation to be around £63.7m.
Martyn Gibbs, the company’s chief executive, said in a statement accompanying the profit warning:
We invested margin in offering gamers competitive product propositions through the bundling of games with hardware and reduced pricing, to recruit as many new generation customers as quickly as possible.
The company, which formerly operate under the name The Game Group, fell into administration in 2012 after suffering a series of financial problems. More than 270 stores were closed and 2,104 employees made redundant before the group was purchased out of administration by private equity firm OpCapita.
Game Digital relisted on the London Stock Exchange in June and finished the year as 2014's best performing float.