Surge in PSP console sales lifts Game Group

A bumper eleventh-hour shipment of Sony PSP consoles meant that Game Group's Christmas was not as much of a turkey as the computer games retailer had feared.

The group, which in November was the first retailer to issue a Christmas profits warning, said supplies of the hand-held console had been better than it had expected.

A 27.7 per cent surge in like-for-like sales in the six weeks to 7 January helped the company guide the City towards the upper end of the profits guidance it issued before Christmas. It believes full-year profits will be between £8m and £10m, compared with the £3m to £13m range it had previously set.

Although the group declared this an "outstanding" Christmas, its profits are still well below expectations before its November warning. It increased its likely margin shortfall, predicting gross margin for the year would fall by 350 basis points. In November, it forecast a 300 basis-point decrease. Martin Long, the chief executive, said: "We put together a strong offer and promoted the older formats. We saw strong like-for-like growth driven by high-ticket software but a lower margin."

In continental Europe, where Game owns 250 stores, it said underlying sales increased 22.2 per cent during the six-week period.