EA expresses concern over "major European retail partner"
Earnings call reveals fears of "increased bad debt and lost sales"
Electronic Arts' John Riccitiello has expressed concern that the financial position of an unnamed European retailer could well have considerable negative repercussions for the publisher.
Speaking in the conference call which followed the company's positive financial results yesterday, Riccitiello refrained from naming the chain, but highlighted its issues as one of three major factors which have influenced a more conservative Q4 projection.
"In terms of guidance, the midpoint of our fiscal year range remains unchanged from the raised guidance on our last call," the CEO told investors.
"This implies a more conservative outlook for Q4. Eric will provide detailed guidance in his comments. Our revised Q4 outlook is based on 3 factors.
"First, retail demand for Star Wars: The Old Republic was strong, and we shipped units right at the end of December that we had anticipated shipping in early January. Second, we are moving an important social game launch from Q4 F'12 to Q1 F'13, and with it the associated profit.
"We are concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales."
John Riccitiello, EA.
"We believe this move will enable us to launch a more highly polished and ultimately more successful title in early FY '13. And third, we are concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales."
Although ha was careful to remain circumspect over the identity of the chain, it seems unlikely that Riccitiello would be referring to anybody but the GAME group, which has experienced considerable financial difficulty recently.
Senior GAME spokespeople have repeatedly denied that the company has had any problems securing stock or paying staff, it has become apparent that patience amongst its lenders may be growing thin, with rumours continually resurfacing about the withdrawal of credit insurance.
If credit is cut off, the publishers may start to ask for payment in advance on stock, so as to prevent loss of assets in the event of a liquidation. Without the funds to pay up front, a store would be caught in a catch 22 of having no funds to buy stock, and no stock to raise funds from.