Little fun for Game as half-year profits set to slump

Published on Thursday 2 July 2009 21:20

RETAIL group Game warned yesterday that half-year profits would be as much as two-thirds lower after last year's figures were boosted by blockbuster releases.

In an update on first-half trading, Game said like-for-like sales in the 21 weeks to last Saturday were down by 15.8 per cent in the UK. It said the performance was in line with expectations after very strong sales in the same period last year, when sales were boosted by demand for games such as Mario Kart, Wii Fit and Grand Theft Auto IV.

The company expects profits for the half year of between 13 million and 16m, compared with 36.4m a year earlier.

However, it said it was looking forward to a "very encouraging" line-up of software releases in the second half, including Wii Fit Plus, DJ Hero and annual sequels to best-sellers such as Pro Evolution Soccer.

The company said it planned to open 50 to 60 additional stores before Christmas, mostly in its international business. It currently has 1,367 outlets – including 698 in the UK and Ireland.

While Game said it remained confident in the outlook for the year to 31 January, shares fell more than 10 per cent as analysts worried that Game had left itself with much to do over the second half of the year.

Analysts Singer Capital Markets said: "Against our assumptions for full-year profits of 121m the performance in the second half is now looking quite stretched, and assumes a significant pick-up in like-for-like trends and sales transfer from failed competition such as Woolies and Zavvi. There is now little room for disappointment."

The games market is in its third generation of hardware, comprising three consoles – Sony PS3, Microsoft Xbox360 and the Nintendo Wii – as well as two handhelds – Sony PSP and Nintendo DS.

Game said the integration of Game and Gamestation, which the company acquired two years ago, was progressing well.