Game Digital in profit warning

Video games retailer Game Digital jolted the City yesterday when it gave warning that full-year profits will come in “substantially below” expectations, wiping more than a third off its stock market value.

The company blamed tough high street trading and the poor stock availability of Nintendo Switch. Game Digital had hoped the console would provide a major boost to sales after a difficult first half to the year.

However, in a trading update yesterday, Game Digital said: “Consumer demand for Nintendo Switch has been, and remains, very strong, however the level of supply to the UK market has been lower than expected.

“The group still expects to deliver positive group gross transaction value growth in the second half of approximately 5-6 per cent, however this is below our previous expectation.

“As a result, we now expect adjusted Ebitda [earnings] for the full year to be substantially below previous expectations.”

Game Digital added that it is seeing “continued softness” in its core Xbox and Playstation markets.

In March, the company disclosed that its six-monthly pre-tax profits tumbled 26 per cent to £16.5 million while sales, by gross transaction value, slumped 18 per cent in the UK.

Despite the supply issue, the Nintendo Switch launch has helped breath new life into the market, which Game Digital said had been difficult with a weaker line-up of game launches in the first half affecting already tough trading.

The group said it was trying to bolster supplier arrangements, and ramp up cost savings.

Shares in the company shed 35 per cent, or 11.5p, to close at 21.5p last night.