GRcade

Game Group shares have plunged by more than a third after the video game retailer cut its revenue forecast.

The firm said annual like-for-like revenues would now be "no better than" a 7% fall, after previously forecasting a 3% drop at worst.

"Our guidance today reflects the extraordinary economic times in which we are operating," the firm said.

Ahead of the busy Christmas trading period, Game said sales since January were down 8.6% on last year.

In morning trade, Game's shares were down 7 pence, or 37%, at 12p.

Analysts said the company's poor performance was linked to a lack of new hardware releases this year.

"Software launches have apparently been going well, but tailing off faster than historically. With no new hardware coming through and an obviously weak consumer market, we are placing our forecasts under review." said Investec Securities analyst David Jeary.

In September, Game reported a £51.5m pre-tax loss and its share price has fallen over 70% since the start of the year.

It has seen its business eroded by competition from online-only retailers such as Steam and Amazon, with Game holding on to 19% of the online market.

Game Group, the computer game retailer, has seen its share price collapse this morning after issuing a warning that revenues will be worse than it predicted back in September.

The company originally said like for like revenue in 2011 would be between 0 - 3% worse than 2010. It now says the figure “will be no better than -7%”.

It also expects margins to be down 150 basis points compared to September’s prediction of 100bps although operating costs may be lower than predicted, with cuts saving perhaps as much as £10m.

Game’s chief executive said of the news: "The overall video games market remains very challenging, despite strong title launches, and our guidance today reflects the extraordinary economic times in which we are operating."

Game’s share price stood at 11.9p at 11.16am. Someone buying shares in the company in June 2008 would now have lost 96% of their investment. Over the last five years Game is down 87%.

Brokers are clearly reassessing their positions on the company: Peel Hunt has downgraded Game from buy to hold and cuts its target from 50p to 20p. Investec has put its buy rating (and 45p target) under review.

KKLEIN wrote:I think it's probably just a matter of time now. Maybe someone will purchase the brand (like Woolworths or Zavvi) & keep it as an online-only entity, or keep one or two stores open as a token gesture.

Delusibeta wrote:Interesting to see many people not realise that share prices do not determine when a company goes bust, or indeed a lack of profits. It's when the cashflow dries up, that's when companies go under.

Analysts said the company's poor performance was linked to a lack of new hardware releases this year.

TigaSefi wrote:I reckon GRCade could turn it around in a week!!!

Game Group