Game reports 6.7% Christmas sales drop

<p>Game Digital has seen sales fall by 6.7 per cent in the 11 weeks to January 10th.</p>

Game Digital is counting the cost of Christmas after the group reported disappointing sales for the period.

The video games retailer, formerly known as Game Group, stated that group sales fell by 6.7 per cent in the 11 weeks to January 10th. It noted that a "highly competitive Christmas trading period" was to blame for the slump in sales. The firm now expects its full year earnings to remain flat as it recovers from the decline.

Black Friday was also highlighted as being one of the key factor behind the drop in sales. The shopping event, started in the US to mark the first shopping day after Thanksgiving, sees retailers slash their prices significantly for a limited time. Both in the US and in the UK it sparked almost riots in certain stores.

Game noted that the Black Friday event accelerated consumer behaviours and thus driving lower average selling prices with an "unprecedented bundling of games". The company explained that there was an increase in promotional activity across the gaming market which resulting in significant hardware volume growth for next generation consoles.

Martyn Gibbs, Game Digital's chief executive officer, explained that the firm wants to capitalise on events such as Black Friday in the future. The aim is to carry this boost in sales carry through to Christmas.

"We now have a huge customer base within the new formats, to sell both mint and preowned physical and digital content and accessories to over the long term," Mr Gibbs said.

"We have a solid line up of new physical and digital games being launched in our second half and have already secured a number of key exclusives. Our teams remain focused on delivering our unique specialist gaming experience for our customers."

The results of the latest trading resulted in a major dip in Game Digital's share price which fell by 35.12 per cent on Wednesday (January 14th) morning.

Find up to date information on the FTSE 100 and spread betting strategies at City Index.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.