Photographer: David Ryder/Bloomberg

Game Digital Falls on Profit Drop, Adding to U.K. Holiday Woes

  • Shares fall to record low as retailer hurt by low traffic
  • Heavy discounting means some retailers could fail: Analyst

Game Digital Plc shares fell to a record low after the video-games retailer said first-half profit would plunge about 30 percent, joining a growing list of British retailers whose holiday shopping seasons have disappointed analysts.

Hurt by customers’ slow transition to new Playstation 4 and Xbox One consoles and lower-than-expected store traffic, adjusted earnings before interest, tax, depreciation and amortization will be about 30 million pounds ($44.5 million) in the six months to Jan. 23, the retailer said in a statement Wednesday. The shares fell as much as 42 percent to 120 pence, the lowest price since the company’s 2014 initial public offering.

“It’s disappointing. People were expecting profit to recover to over 50 million pounds,” independent retail analyst Nick Bubb said. It’s the second profit warning from the company this year.

The lackluster trading fuels concerns over the prospects for U.K. retailers over the critical Christmas season, following profit warnings at Home Retail Group Plc and Bonmarche Holdings Plc. Black Friday in late November failed to boost store traffic in the same way it did a year ago, leaving retailers with excess stock to shift. That’s been compounded by unseasonably mild weather hurting sales of winter clothing.

Discounting by U.K. retailers in the run-up to Christmas has risen for the fifth consecutive year, according to business advisory firm Deloitte, which found that merchants have marked down about 45 percent of their products.

“There is a horrible amount of discounting going on,” Bryan Roberts, an analyst with Kantar Retail, said by phone. “It’s not beyond the realms of possibility that one or two retailers will go into administration in the first few months of next year.”

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