Game sales weaker than expected, shares fall – Yahoo! Malaysia News

Sunday, December 27th, 2009 at 8:04 pm

Game sales weaker than expected, shares fall – Yahoo! Malaysia News

* Like-for-like sales down 13.9 pct vs f'cast 10 pct fall

* Demand for Call of Duty not matched by other titles

* Cautious on Xmas, expects FY profit of 87-120 mln stg

* Shares down 15 percent, touch 11-month low

By James Davey

LONDON, Dec 8 – British computer games retailer Game Group Plc posted a steeper-than-expected fall in quarterly sales as phenomenal demand for “Call of Duty: Modern Warfare 2″ and “FIFA 10″ was not matched by other titles.

Shares in Game, which trades from over 1,400 stores in nine European countries and Australia, were down 22p or 15.2 percent at 122.6p by 1203 GMT, having touched an 11-month low of 122p.

Game highlighted deep price cuts by supermarkets as having intensified competition, but said it was still winning market share and saw releases such as “Mario & Sonic at the Winter Olympic Games” and “DJ Hero” as potentially boosting its performance in coming weeks.

However some analysts took a negative view following the trading update. David Stoddart at Altium Securities cut his price target to 150p from 190p and his recommendation to “hold” from “buy”. “We are increasingly nervous about the prospects,” he said.

Game said its sales at stores open at least a year fell 13.9 percent in the 18 weeks to Dec. 5. That compares with analyst expectations of a fall of about 10 percent.

The company expects to achieve a pretax profit in a range of 87 million pounds to 120 million in the year to the end of January, compared with 126.2 million last year. [ID:nLL678443]

“The release schedule as a whole was very strong for Christmas and there have been some real record-breaking performances which have to some degree overshadowed some of the other launches,” Game Chief Executive Lisa Morgan told Reuters.

“We've got 25 percent of our key annual sales to come and as we move towards the Christmas selling period we've seen some of the market trends improve.”

She also noted that although recent price cuts on Microsoft Corp's Xbox 360 Elite and Sony Corp's <6758.T> Playstation 3 had increased demand, revenue from increased unit sales of these formats had not offset an overall fall in hardware revenue.

Analysts at Deutsche Bank cut their current-year profit forecast to 98 million pounds from 109 million.

Game reiterated it expected its gross margin for the full year to increase by 170 to 220 basis points, reflecting higher margin software and accessory sales being a larger part of the total sales mix and higher sales of pre-owned items.

Prior to Tuesday's update, Game shares had lost 17 percent of their value over the last three months, underperforming the general retailers index < .FTASX5370> by 25 percent.

Also on Tuesday, Tesco Plc , Britain's biggest retailer, reported third-quarter sales towards the bottom end of analysts' expectations, while a survey said British retail sales in November rose at their slowest annual pace since August, dampening optimism ahead of the Christmas shopping period. [ID:nGEE5B60FZ] [ID:nLAG005981]