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Game Group hit as some suppliers refuse to do business Game Group hit as some suppliers refuse to do business
(about 1 hour later)
Struggling video games retailer Game Group has confirmed that a number of its suppliers are now refusing to do business with the company, sending its shares down 67%. Struggling video games retailer Game Group has confirmed that a number of its suppliers are now refusing to do business with the company, sending its shares down 55%.
Game said it was "working actively to resolve these issues as quickly as possible", but that it was unsure if its efforts would be successful. Game said that while it was trying to resolve the matter "as quickly as possible", it was unsure if its efforts would be successful.
There is speculation that Game will struggle to pay a quarterly rent bill due later this month. Some analysts say Game may fail to pay a quarterly rent bill later this month.
Game recently issued a profit warning. This increases the possibility of the company going into administration.
Earlier this month, the company secured a fresh lending deal with its banks, but this has failed to impress its suppliers. Earlier this month, Game secured a fresh lending deal with its banks, but this has failed to impress its suppliers.
Game said in a statement on Monday: "It is uncertain whether any of the solutions currently being explored by the board will be successful, or will result in any value being attributed to the shares of the company."
One such games company that is refusing to supply Game is Electronic Arts. This has meant that Game has not been able to stock some of the biggest-selling games, including Mass Effect 3.
Poor ChristmasPoor Christmas
Game has seen its business eroded by competition from online-only retailers such as Steam and Amazon. Game has seen its business eroded by competition from online-only retailers, such as Steam and Amazon.
The company, with headquarters in Basingstoke, has 1,300 stores worldwide, including 600 in the UK, trading under the Game and Gamestation brands.The company, with headquarters in Basingstoke, has 1,300 stores worldwide, including 600 in the UK, trading under the Game and Gamestation brands.
Both Game and Gamestation also have an online presence, as does the firm's third internet-only brand, Gameplay.
Its group-wide sales for the key Christmas period fell sharply, dropping 12.9% from a year earlier on a like-for-like basis.Its group-wide sales for the key Christmas period fell sharply, dropping 12.9% from a year earlier on a like-for-like basis.
It is now predicting an underlying pre-tax loss of about £18m for the year to the end of January.It is now predicting an underlying pre-tax loss of about £18m for the year to the end of January.
Game traces his itself back to 1992, when a company called Rhino Group was established.
In 1995 its stores were rebranded as Electronics Boutique, with the Game name following in 2002.
Analysts say Game is now looking for a suitor, with US rival Gamestop being named as the leading candidate.
However, analyst Mark Photiades of Singer Capital Markets said no buyer was expected to come forward before any move by Game into administration.
"We suspect that any potential suitor would prefer to wait for a formal administration process," he said.
"Through a pre-pack, the suitor would have much greater flexibility around store liabilities."