Fears over Game's future after leading supplier refuses to deliver new release

 

Fresh concerns were raised over Game Group's future yesterday, after a leading games company refused to supply it with its latest products over concerns about its creditworthiness.

Shares in the retailer crashed by 16 per cent to 4.92p after an internal memo yesterday said Electronic Arts had rejected its plea for relief on its credit terms to sell the Mass Effect 3 game due for release next week.

The retailer, which is trying to sell its 663-store overseas business, "apologised sincerely" and guided customers to EA's website and rivals Amazon, Play, Zavvi and shopto.net.

Game is battling not only these internet specialists and a proliferation in digital downloading of games, but also a brutal consumer slowdown in spending on its products.

The retailer, which has 610 shops in the UK, warned on profits in January for the second time in three months. It made a loss of £18m for the year to 31 January.

In the memo, Tom Devine, the group's channel director, said: "We will not stock products if the terms are not right for our business – we will not sacrifice long-term credit requirements for short-term sales opportunities.

"As a result of us taking this position – a position that we believe is critical to our long-term health as a business – we have taken the very difficult decision not to stock EA's March releases, including Mass Effect 3."

It is unclear if Game will stock Nintendo's Mario Party Nine game.

Game's future had looked brighter earlier this month when its lenders relaxed the terms of its loans.

On a conference call with investors last month, EA's chief executive, John Riccitiello, said: "We are concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales." It is understood that Mr Riccitiello was referring to Game.

On EA, a Game spokesman said: "Both businesses are already engaged in discussions about future launches together. It is always a matter of regret when customers are inconvenienced, and both the group and EA are committed to ensuring that this situation does not occur again."

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