Game Group profits to be hit by discounts

City A.M. Reporter
Computer games retailer Game Group said profit margins would fall by more than expected this financial year as it cut prices to retain share in a market being targeted by grocers and other retailers.

Game, which trades from over 1,300 outlets in nine European countries and Australia, said on sales trends had improved in recent weeks, helped by new title launches, and that it had maintained a leading market share for the two key new games "Call of Duty: Black Ops" and "FIFA II."

The group also said it had high hopes for Microsoft Corp's Kinect motion-sensitive gaming platform, which Tesco tipped to be a top-seller this Christmas.

However, Game said that in order to remain competitive it now expected profit margins to fall by between 160 and 190 basis points this financial year, more than its previous guidance for a decline of about 100 basis points.

"As we enter the key Christmas period, we have seen some positive indicators in the market," it said.

"However, the ongoing weakness in the market performance of hardware and casual gamer products means that we are maintaining our cautious outlook for the remainder of the current financial year."

Sales at stores open at least a year were down 4.6 per cent in the 18 weeks to 4 December, including a decline of 7.6 per cent in Britain and Ireland and a 0.5 per cent rise overseas.

For the 44 weeks to 4 December sales on the same basis were down 7.9 per cent, with declines of 12.2 per cent in Britain and Ireland and 1.5 per cent abroad.