Game Digital has issued its second profit warning in less 12 months following a margin decline in sales of the older merchandise such as Xbox 360 and Nintendo 3DS and a “slower than anticipated” switchover rate to newer games across the Xbox One and Playstation 4.
A 14% fall in revenue in the 21 weeks to December 19 means that half-year profits will come in at just £30m.
“The trading conditions in the UK video games market have been challenging,” said Chief Executive Martyn Gibbs. “The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market. The extend of the impact of this switch over has only become apparent in December which has been compounded by lower year on year high street and shopping centre footfall.
“The next few days will represent the busiest trading period for the Group. However, given the recent trends and disappointing sales since the start of school Christmas holidays, the board now expects that the adjusted EBITDA for the 26 weeks ending 23 January 2016 will be around £30m.”
Adjusted EBITDA for the same period last year was £43m.
The gaming retailer previously traded under the name The Game Group, but fell into administration in 2012 after being hit by a succession of financial problems. Over 270 stores were closed and 2,104 employees made redundant before the group was bought out of administration by private equity firm OpCapita.
Game Digital relisted on the London Stock Exchange in June and finished the year as 2014’s best performing float.