Game Group issues profit warning

COMPUTER games retailer Game Group yesterday cut its full-year profit forecast following poor Christmas sales, which were hit by growing supermarket competition and a slowing video games market.

The results bucked the trend elsewhere for healthy festive spending. A survey showed British retailers enjoyed the biggest rise in total sales in a December since 2005.

“The negative trends in the PC and video games market continued over the key Christmas selling period and we would expect the overall market to continue to see declines,” said Game chief executive Lisa Morgan.

For the five weeks to 9 January, sales at Game stores open more than a year fell 13.8 per cent, while total sales dropped 12.1 per cent, Game said in a trading statement. The company said it now expects its pre-tax profit for the full year to 31 January to be between £87m and £93m.

Game said last month it expected pre-tax profit between £87m and £120m, compared with £126.2m a year earlier.

“The trading update over Christmas was worse than expected. The stock will remain under a cloud until we start to see some positive momentum in revenues,” said Seymour Pierce analyst Freddie George who cut Game’s 2009/10 pre-tax profit forecast to £90m from £100m.

Game added that revenues in 2010/11 were likely to decline but that its sales mix would move towards higher margin new and pre-owned products.