Game Group's value cut in half after sales slump prompts another profits warning

Computer-games retailer expected to record loss of £10.7m for the year

Game Group, the troubled computer games retailer, has blamed "extraordinary economic times" for another profits warning after a spike in sales of new releases failed to materialise.

Nearly half was wiped off the market capitalisation of Game yesterday after it marked down its guidance on profits, gross margins and underlying sales. Analysts at Peel Hunt now expect Game – which has a total of 1,287 stores globally – to sink to a loss of £10.7m for the year to 31 January 2012, compared with a profit of £37.8m the previous year.

In a tale of woe, Game said revenues at its software, hardware, pre-owned games and accessories units were down. Ian Shepherd, the chief executive of Game, said: "The overall games market remains very challenging, despite strong title launches, and our guidance today reflects the extraordinary economic times in which we operate."

Some industry experts believe the inexorable shift to downloading games online means that Game could be only a few steps behind the troubled entertainment group HMV in terms of having to find a plan B. Others question whether Game should be a quoted company, when it is so reliant on the vagaries of the release cycle of games.

Game raised hopes in its interim statement on 27 September, when it listed 15 top-rated games to launch before December, including Call of Duty: Modern Warfare 3, Battlefield 3 and Fifa 12. At that time, it admitted that the next 10 weeks are "extremely important", as they represent about 40 per cent of annual revenues. But in the seven weeks since then, Game's sales fell by 4.9 per cent, while they were down 2.9 per cent on a like-for-like basis.

Philip Dorgan, an analyst at Panmure Gordon, said: "Game's last outlook statement read like a child's letter to Santa. It appears the unfortunate child will not be getting any pressies." Game last warned on profits in June.

Mr Shepherd said: "The big game launches over the last few weeks have gone pretty well." But he conceded that cash-strapped customers had cut back significantly on purchases of hardware, accessories and back catalogues. He also touted its digital operations as its "fastest growing business".

But the group's e-commerce sales were "flat" over the 41 weeks to 12 November.

While its online margin has doubled since its website relaunch, Game's share of the internet market remained at 19 per cent. At its 610 stores in the UK and Ireland, Game's like-for-like sales plummeted by 10.5 per cent over the period. Game expects its full-year sales will be "no better" than a fall of 7 per cent, compared to previous guidance of flat to lower by 3 per cent.

Sanjay Vidyarthi, an analyst at Espirito Santo, said: "[Game's] longer term strategy continues to make sense, but it is difficult to see when the short-term pain ends."

But Mr Shepherd insisted Game had "outperformed the market". He pointed to a 10.6 per cent fall in its total sales over the 41 weeks, compared to a 12.3 per cent decline in the overall video games market. Shares in Game fell by 8.7p, or 46 per cent, to 10.3p.

Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
PROMOTED VIDEO
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
News
ebooksNow available in paperback
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Life and Style
tech
Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Carlton Senior Appointments: Sr Wealth Manager - San Francisco - Inv AdvisoryFirm

$125 - $175 per annum: Carlton Senior Appointments: Senior Wealth Manager – In...

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum