Game sinks into the red as Nintendo Wii sales tumble

Game Group blamed a worse than expected first-half loss of nearly £20m on the continuing dire market for the Nintendo Wii.

The computer and video game retailer said the market had suffered a 40 per cent slump in revenues for Nintendo's games console this year. Game, which is set to close 85 of its 635 stores in the UK over the next three years, yesterday said the industry is "undergoing a significant transition, with fewer hardware and software launches in the year to date".

Game sunk to a pre-tax loss, before non-recurring costs, of £18.8m, for the 26 weeks to 31 July, compared to a profit of £14.5m last year. While Peter Lewis, the chairman of Game, described the market as "very challenging" and the economy as "uncertain", he said the retailer had grown market share in all its territories since January.

Mr Lewis added it was "well positioned" to benefit from the imminent launch of new motion-sensing technology and an "extensive" range of Christmas software releases.

Game is on track to deliver savings of £7m this year and £10m in 2011. But group underlying sales tanked by 10 per cent over the 34 weeks to 25 September. Game's UK and Ireland division was the laggard with sales down by 14.8 per cent. Sales at its international operations – in countries including the Czech Republic, France and Australia – were 3.2 per cent lower over the period. Keith Bowman, an analyst at Hargreaves Lansdown, said: "As investors feared, deteriorating fortunes [at Game] are clearly evident."

Game also suffered a fall of 290 basis points in its gross margin, as it focused more on "value" products. Revenues fell 9.6 per cent to £624.6m.