Nintendo demand drives Game Group sales

Strong demand for Nintendo video game products caused sales figures to surge at retailer Game Group today.

Game, which merged with retailer Gamestation in May, revealed a 44.1% rise in like-for-like sales in the 45 weeks to December 8, while total group sales were up 89.1% when including Gamestation figures.

Chairman Peter Lewis said: “This exceptional sales growth reflects strong consumer demand for all product formats, particularly so for the Nintendo DS Lite and Wii console.

“We are very pleased with the performance for the year to date, and we look forward to the key Christmas trading season.”

Mr Lewis added that demand will outstrip supply for the Nintendo Wii console, and warned rival retailers are looking to increase turnover of video games products to capitalise on the growing market.

Another challenge for the company will come in the form of lower margins. Game Group said customers are currently buying new consoles, which are less profitable than software sales.

Game Group has added 333 new stores so far this year, including 217 acquired with the purchase of Gamestation, and currently operates more than 1,150 outlets.

The cost of opening new stores, excluding Gamestation, and website investment is set to hit €55.7m for the year to January 31, the firm added.

Mr Lewis said Gamestation, which is aimed at the “core gamer”, is less profitable than Game stores, and gross margin for the full year is expected to fall by up to 3.25%.

Shares fell 2%, although analyst David O’Brien, of Altium Securities, welcomed today’s trading statement and said sales growth was ahead of expectations.

He said: “The excellent top-line growth, aided by the strong sales of Nintendo’s Wii and DS will mean that current market estimates will be exceeded should the strong momentum in the business continue for the remainder of the year.”