Game store discounts to hit margins

Video games and consoles retailer Game Group today warned profit margins would be hit as it runs more promotions to reverse falling sales.

But the company said it was encouraged by an improved performance in recent weeks, helped by record-breaking sales of new game releases 'Call of Duty: Black Ops' and 'FIFA 11'.

Like-for-like sales in the UK and Ireland were down 7.6% in the 18 weeks to December 4, compared with a 16.2% decline in the first half.

Game, which has 641 stores in the UK and Ireland, said sales of second-hand games and consoles were on the rise and will make up 25% of its turnover this year, against 21% the previous year.

The group’s recent sales improvement comes after a difficult first half saw it report underlying pre-tax losses £18.8m (€22.35m) in the six months to July 31, compared with profits of £14.5m (€17.24m) a year earlier.

However, shares in the firm dropped 6% today after its gloomy news on profit margins.