Game Digital (LSE:GMD) issued a profit warning on Friday morning, due to low supplies of Switch consoles.
The high street retailer warned that annual profits would be “significantly below expectations” as the company continued to face a “challenging trading environment” in the UK.
Across the UK arm of its businesses, Game said that although customer demand for the newly launched Nintendo (OTCMKTS:NTDOY) Switch console had remained solid, lower-than-expected stock availability had dented profits.
Moreover, softer trading of core Xbox and PlayStation markets had impacted sales across the period.
Nevertheless, the company noted strong performances for its Spanish businesses, which it said was on track to achieve record sales for the year.
Overall, Game said it still expects to deliver positive growth results in the second half of the year, estimated at 5-6 percent, still substantially below its initial projections.
As a consequence, the company warned that full-year results would prove “substantially below previous expectations”.
Back in March, Game revealed revenues had decreased by over 9 percent in the 26 weeks to January 28, while pre-tax profits dipped 27 percent to £16.5 million.
Chief executive Martyn Gibbs commented back in March that the disappointing performance had been as a result of “weaker line-up of new games launches and the market-wide underperformance of certain key titles”.
Looking ahead, the retailer expected to return to growth in both the UK and Spain, with upcoming releases from Xbox, Playstation and Nintendo.
It expects growth to be further stimulated by the success of new in-store gaming arenas, which are now in operation in 12 locations, which it is looking to expand.
The company is set to release its full-year results for the 52 weeks ending 29 July 2017 in October 2017.
Shares in GAME dipped as much as 25 percent in early trading following the profit warning. Shares are currently down 28.03 percent as of 09.19AM (GMT).