PS2 shortage bites GAME figures for Christmas

Leading British videogames retailer GAME Group has issued a trading statement covering the holiday sales period, revealing that the shortage of console hardware led to a shortfall in revenues during the last six weeks of 2004.

The group's like for like sales in the UK and Ireland dropped by 20.4 per cent during the six weeks leading up to January 8th, with total group sales down 9.8 per cent - shored up slightly by strong results in continental Europe, where sales rose 22.6 per cent.

The group had previously predicted that its LFL sales for the full year would be down slightly on the 2003 figure, and with only two weeks remaining in the financial year its group LFL figure is indeed down 12.1 per cent, with total group sales down 4.8 per cent.

The company doesn't seem to have anticipated the scale of the PS2 hardware shortage which afflicted UK retail before Christmas, though, and while it worked on software bundles and promotions for alternative platforms to fill the gap, Sony's supply difficulties have clearly impacted the retailer badly.

"The non-availability of console hardware in the run up to Christmas was particularly disappointing after the strong start to the second half, with titles such as GTA: San Andreas and Halo 2 setting sales records," commented GAME Group chairman Peter Lewis in today's trading update.

"Faced with this unprecedented breakdown in the supply of PlayStation 2 and the resultant impact on customer flows, we rapidly adapted our trading strategy utilising strong software offers and promoting alternative hardware formats to drive gross margin," he continued. "Throughout the year we have maintained strong cost controls and this has also helped to offset the impact of reduced revenues."

Despite the revenue difficulties, GAME expects to announce second half performance which will be around 10 per cent ahead of the same period last year - while the Continental Europe business is expected to come close to breaking even for the full year, a year ahead of the company's projections.

The firm is also optimistic about its performance in 2005, especially in light of the planned arrival of new handheld platforms in the coming months. "We remain confident regarding the medium term prospects for GAME," according to Lewis, "with the new handheld products, the Sony PSP and the Nintendo DS, scheduled for the first half of 2005."