Game Group peers in to the abyss

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.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

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.

BS