The supply shortages of Nintendo Switch made the video game retailer GAME Digital release a warning to inform investors about an expected slump in profits. Company representatives announced that the challenging trading conditions in the UK, as well as the poor sales of PlayStation and Xbox, would result in below the expectations full-year earnings. The GAME revealed that the adjusted earnings before EBITDA (earnings before interest, tax, depreciation and amortization) would miss the goal the company has previously set.
Nevertheless, the release of the Nintendo Switch console has partially compensated for the weak PS and Xbox sales. In addition, GAME’s business on the Spanish market is meeting company’s expectations in terms of profits. As a matter of fact, the GAME expects “record” sales.
The retailer has encountered serious difficulties in meeting the high demand for the Nintendo Switch console. The latter went on sale in March, but the number of available units was insufficient to meet customers’ needs.
Nintendo has already apologized to users for the console shortages and confirmed that the shipment will be increased in July and August. Nevertheless, fans remain hopeful that the console supply will be sufficient at least until the Christmas shopping season.
Back in March, the GAME announced that the sales would depend on Nintendo’s stock availability. In May, the console production was increased. The hybrid console is still expected to deliver a 5%-6% sales growth in H2 of the financial year. Still, these percentages do not correspond to the initial expectations. The GAME Digital expects the launch of the Xbox One X console to provide the necessary boost in sales.
Apart from the profit warning, the company has also reported a weaker than expected first half in which pre-tax profits saw a 27% decrease.
The decrease was attributed to the poor performance of the blockbuster titles and the weak round of launches. The retailer has attempted to shift itself away from being dependent on console launches and games requiring a cutting-edge equipment. Video games developers seem to be focused on increasing their profit margins by selling games as direct downloads. A trend, that had a severe impact on high street retailers’ profits.
The GAME Digital will release a report on its full-year financial performance in October.
