Game Group profits set to double

Retailer Game Group has said full year profits were on track to beat expectations after a surge in demand for Nintendo video games.

The specialist PC and video game chain said sales had continued to soar since it last updated the market on December 11, when it reported a 44% surge in like-for-like sales.

Game said it now expects pre-tax profits before one-off costs to be at least £70 million for the year to the end of January, more than double the £29.5 million reported the previous year, thanks also to its recent acquisition of Gamestation.

The firm added that one-off costs associated with the £74 million takeover, which received provisional clearance from the Competition Commission earlier this month, would be around £8 million.

This includes costs of £4.5 million for complying with the Competition Commission probe into the deal and a further £3.5 million relating to the integration of Gamestation.

Shares rose 8% as investors cheered Game's trading news.

The Basingstoke-based group said earlier this month that strong demand for all product formats, particularly the Nintendo DS Lite and Wii console, had led to "exceptional sales growth".

Sales were up 44% on a like-for-like basis during the 45 weeks to December 8, while they rose by 89% once the Gamestation figures were included.

Game Group has added 333 new stores to its portfolio so far this year, including 217 acquired through its takeover of Gamestation, bringing its total number of outlets to 1,150. But it also recently warned that gross margins for the year are likely to fall to 3.25%.

It said consumers were currently buying new consoles, which are less profitable than software sales, while Gamestation outlets, which are aimed at the core gamer, are less profitable than Game stores. The group will offer a full report on its Christmas trading for the six weeks to January 12 on January 15 as originally planned.