Game Digital rocked by ‘disappointing’ Christmas sales

Shares in the company dropped to nearly 40% to 125p in early trading.

A young man plays Grand Theft Auto IV (Getty)

Video games retailer Game Digital has issued a profit warning after it was hit by disappointing sales at the start of the festive trading season.

Shares in the company dropped to nearly 40 per cent to 125p in early trading.

The retailer, created in 2012 after Game Group fell into administration, said a number of factors had combined to make trading conditions challenging.

"The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market," chief executive Martyn Gibbs said in a statement.

"The extent of the impact of this switch over has only become apparent in December which has been compounded by lower year on year high street and shopping centre footfall."

Its sales of video games sales have plummeted 13.5 per cent in the 21 weeks to December 19, while gross transaction value was down 6.7 per cent at £466.8 million.

It did not have high hopes for the remaining weeks of its first half either.

"The next few days will represent the busiest trading period for the Group. However, given the recent trends and disappointing sales since the start of school Christmas holidays, the board now expects that the Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) for the 26 weeks ending 23 January 2016 will be around £30 million."

Adjusted EBITDA for the same period last year was £43 million.