Soaring console sales boost Game

Is anyone seriously surprised? Game Group reported a 44 per cent increase in like-for-like sales for the year to date as consumers flocked to stores to buy Nintendo's DS and Wii consoles.

Europe's biggest specialist games retailer said sales were also being boosted as new family-oriented games such as Brain Training and High School Musical, the singalong game, expanded the market beyond its traditional audience of teenage boys.

Lisa Morgan, chief executive, said: "It's a really different market from a couple of years ago. There is still a big demand for the traditional games like Need for Speed. But games such as Brain Training are also featuring in the top 20.

"Demand for Nintendo's DS is exceptional and demand for the Wii is outstripping supply.

"Sales of the PlayStation3 have accelerated since Sony cut the price and we expect around 800,000 to 1m PS3s to be sold in the UK by the end of the year," Ms Morgan said.

However, accelerating console sales are a mixed blessing for Game as the company makes much lower margins on hardware than software.

Game yesterday warned it expected group margins to fall by 275 to 325 basis points in the year to January 8, a bigger drop than it had previously outlined in September.

Game's profitability will also be hit by the purchase of Gamestation, a rival games retailer that operates at a lower margin than Game's own stores.

Margins are expected to begin improving next year, as the mix shifts back towards buying games, Ms Morgan said.

Total sales were up 89 per cent in the 45 weeks to December 8, reflecting the opening of 333 new stores, taking Game's portfolio to 1,150 across Europe.

Altium Securities up-graded its recommendation from "add" to "buy". However, shares in Game, which have more than doubled in value over the past year, fell 8½p to 234p.

http://www.ft.com/cms/s/0/6f5b33e4-a855-11dc-9485-0000779fd2ac.html