Morgan still dedicated to GAME following shares sale

via Games Industry


The GAME Group has told GamesIndustry.biz that yesterday's sale of shares by senior execs was purely to do with timing due to last year's acquisition of rival retailer Gamestation, and that CEO Lisa Morgan is still dedicated to the business

Morgan and deputy CEO David Thomas sold 1.3 million and 1 million shares, respectively, causing shares in the Group to fall 14.3 per cent to GBP 192 in yesterday's trading.

"It's a simple case of timing," said a spokesperson for the retailer. "We were in a close period for the majority of last year and we're about to enter another close period this Friday because of our results due in April."

"Lisa still maintains a strong holding in the company and has always shown long term dedication to the group," added the spokesperson.

The fall in share price was branded as "harsh" by analyst Eithne O'Leary, of Oriel Securities.

"The shares finished the day down 32p or 14.3 per cent on fears that management has sold out at the top of the cycle," noted O'Leary.

"For a business that has spent 11 of the last 12 months in close period post the announcement of the Gamestation acquisition, we believe this is excessively harsh."

"We do not believe that the shares' sales signal the beginning of a cyclical downturn, on the contrary the future is very bright."

Oriel Securities expects GAME to perform well during the next two years, even if total software sales drop off.

"With 6 million loyalty card users, an active trade in previously owned games and a higher share of the software market, we expect the next two years to be strong for GAME in gross profit terms," said the company.

"Software margins are typically very much higher than hardware margins, so even if total sales do drop in 2009/10, gross profits are likely to rise.

"Recent acquisitions and store openings in overseas markets will ensure a very strong contribution to group profits, particularly in the context of the robust nature of underlying demand for Wii and PS3," added the analyst.