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UK Retailer GAME Lowers Profit Guidance After Weak Sales

Game Group says holiday season sales were down 13.8 percent and fiscal year sales were down 14.8 percent thanks to lower Nintendo platform revenues and fierce price wars.
UK-based retailer Game Group says holiday season sales were down 13.8 percent and fiscal year sales were down 14.8 percent thanks to lower Nintendo platform revenues and fierce price wars, with the firm adjusting its profit projection to between GBP 87 million ($141 million) and GBP 93 million ($150 million), compared to previous analyst expectations of GBP 96.5 ($156.1 million). The company's fiscal year comparisons refer to the 49-week period that ended January 9, while the holiday year figures refer to the 5-week period that ended the same date. Despite the declines, Game Group chairman Peter Lewis said sales have seen "significant improvement" in the last two weeks or so, thanks to store promotions and the kickoff of new releases again. Game Group says poor performance in 2009 is most significantly due to "a fall in revenues from the Nintendo formats," a drop that has disproportionately affected the UK market. Game's revenue in the UK was down 16.8 percent for the fiscal year and 17.5 percent for the holiday season -- materially more than for the company as a whole. The retailer has of course also been impacted by fierce price competition by non-game retail chains, but Game says the introduction of new console technologies like Natal launching this year will likely drive consumers to specialty retailers in order to seek out the advice and expertise of dedicated video game salespeople. The add-ons are also expected to bolster retail with new promotions and marketing support. In the meantime, Game looks forward to "a strong schedule of new releases" like Mass Effect 2, Splinter Cell: Conviction, Bioshock 2, and God of War 3.

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