Late surge by shoppers eases Game Group's Christmas woe

Game Group, Britain's largest video-games retailer, saw its shares surge 10 per cent yesterday after the company painted a brighter picture than previously, saying trading picked up at the end of December due to last-minute gift buying.

The company lost two-thirds of its value in December after it warned that slowing sales and reductions in the prices of games would knock its profits this year.

At that time Game Group said it expected full-year profits to 31 January to be flat, having made £31.5m in the previous year.

However, yesterday, Martin Long, the company's deputy chief executive, indicated that the rush in the second half of December meant pre-tax profit before goodwill for the year would be "slightly ahead" of a year ago.

In a trading statement the company, which sells games such as Harry Potter and Grand Theft Auto, said like-for-like sales had recovered from being down by 4.7 per cent in the first two weeks of December to an increase of 3.8 per cent for the month overall. Overall sales growth was higher at 7.5 per cent.

Many consumers left their Christmas shopping until the last minute in 2002, the British Retail Consortium said earlier this week.

With Christmas Day falling on a Wednesday last year, shoppers had an extra day in which to buy their presents, the organisation said.

The late surge in sales experienced by Game and others was partly driven by their decision to cut prices mid-way through December. Game lowered the price of the Sony PlayStation 2 titles Harry Potter and The Chamber of Secrets and The Fellowship of the Ring to £29.99 from £44.99. The company admitted the price-cutting would erode its profit margins this year.

Game Group said its stores in Continental Europe had not performed as well as those in the UK over the holiday season. Same-store sales in French stores were down, while those in Sweden and Spain showed some growth.

The company makes between 10 per cent and 15 per cent of its sales outside Britain.

Game said its like-for-like sales grew by 12.2 per cent during the 11 months to 4 January, comparing favourably with recently published statistics that showed the overall UK market grew by 8 per cent in 2002.

The Entertainment and Leisure Software Publishers Association said that 2002 was a record year for the industry, after sales of video games hardware and leisure software touched £2.07bn, exceeding both video rental and cinema.