Game Digital warns on profit on low Switch supplies

Shares in Game Digital plunged by 30% after it issued a profit warning following low supplies of the new Nintendo Switch into the UK.

The video games retailer said that although demand was strong for the console, stock availability was lower than expected.

Game Digital also said demand for the Xbox and PlayStation consoles was softer than forecast.

The company now expects to miss annual targets for sales growth and income.

In early trade, its share price fell by 10p to 23p.

Game Digital, which operates in Britain and Spain, had said in March that while it expected "the challenging environment" in the UK to continue into the second half of its financial year, it had hoped sales of the Nintendo Switch would lift revenue.

As a result of slower supplies of the Switch and less demand for other consoles, sales will now grow below forecasts at 5-6%, Game said.

Nintendo had expected to sell two million Switch consoles when it launched in March, but it exceeded the target to sell 2.3 million, and Nintendo had prioritised supplies to the larger US and Japanese markets ahead of Europe.

A report by IHS Markit following the launch said: "It is now clear that Europe has had significantly less stock to sell compared to the USA, with Nintendo prioritising the North American sales region for the launch. Japan, comparatively, has also had a lot more stock for its relatively smaller population."

Game Digital was more upbeat about next year when it said it expected to benefit from better supplies of the Nintendo Switch "as well as the strong interest that is building for Microsoft's new Xbox One X console".

It also anticipates a "stronger" line-up of new video games releases including Destiny 2, Star Wars Battlefront 2, Call of Duty WWII and Mario Odyssey.