Game Group
AVOIDFresh sales figures from the games retailer show sales down by 9.1% in the new year
The internet looks to be turning the tide against video games retailers like Game as it has already done for their music focused neigbours.
Gaming giant Sony is about to launch a new handheld machine, the PSP Go, that will only need an internet connection to the Sony website to buy new games. It does not require cartridges or disks and therefore means games retailers will be totally bypassed.
Sony is one of a few market leaders and if the rest of the industry follows, the paradigm shift would spell curtains for Game and its ilk. Already websites like Steampowered offer gamers the chance to download games and begin playing immediately.
Although it already possesses an online facility, the potential dilution of its position if the industry moves this was is a significant anxiety for Game in the long term. Fresh sales figures released at the company’s general meeting show that even in the short-term the company is suffering, with total group sales down by 9.1% in the first 21 weeks of the year.
Although up against strong comparables the year before, when an ‘unprecedented’ number of games releases included such big sellers as Wii Fit and Grand Theft Auto IV, like-for-like sales for the same period to 27 June were down by 15.4%. Having kept a handle on costs and enjoying a higher mix of console sales, chairman Peter Lewis says first-half profits should come in ‘between £13m and £16m’ before tax and non-recurring costs, in line with management’s expectations but less than half last year’s £36.4m interim profit.
For the whole year, City forecasts were pointing to profits of £115.8m and earnings of 24.17p, but broker KBC now expects a much lower £87.3m and 18.3p. The shares, bouncing around like Super Mario between last year’s all-time high of 300p to a 105p low and back up to over 200p, should be avoided.
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Market cap: £491.78m
PE Forecast: 7.8
Share price: 142p
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