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Game Group cuts FY profit forecast as Christmas sales slide 12%

Game Group (LSE: GMG) said negative trends continued to persist in the PC and video games market over the Christmas period, pushing its sales down 12.1%, while like-for-like sales tumbled 13.8% during the holiday season and 14.8% for the the 49 weeks to January 9 2010.

The declines were due to a weak performance in the UK, where group sales declined 18% with like-for-like sales slipping 17.5% during the holidays and 15.1% and 16.8% for the year to date. International sales increased 0.9% during Christmas, while they were down 5.9% on  a like-for-like basis, while for the year to date, total international sales slid 1.3% and like-for-like sales declined 10.2%.

“The negative trends in the PC and video games market, outlined in our previous trading statement, continued over the key Christmas selling period despite strong software releases and a sizeable installed base of hardware. This, combined with the strong comparative period and the impact of customers shopping later, resulted in like for like sales declines of 13.8% for the group over the last five weeks,” said chairman Peter Lewis.

The group lowered its forecast for pre-tax profits for the full year to between £87 million and £93 million, while expecting an increase in net cash at January 31, also reporting a “significant improvement” since Christmas as customers have responded positively to its mint and preowned sales offers and release of new software.

Capital expenditure in 2010/11 is expected to be in the region of £20 to £25 million, compared to an estimated £32 million in the current year.

Shares in the company slid 6.5% on the news.

Disclosure: The author holds no positions in the company