Financial analysts have hit back at a damning Goldman Sach’s report on retailer GAME.
John Stevenson from Peel Hunt and David Jeary from Investec have said GAME’s recent Strategy Update shows the company is doing the right things to ensure future profitability.
Their statements follow a report from Goldman Sachs, which downgraded GAME from Neutral to Sell. Analyst Rachel Carson said GAME’s move into digital had come too late and that the next round of consoles are likely to be focused on digital over retail. She added that GAME will need to close more than the currently planned 85 shops, suggesting up to 105 could be shut.
However, Stevenson and Jeary disagree.
We have the opposite view and we have GAME stock on Buy,” said Peel Hunt’s John Stevenson.
I am sanguine in terms of the outlook for GAME. I have followed GAME for about ten years now, and each generation of consoles have been exactly the same.
We are now at the bottom point in the console cycle and I feel we are at that turning point. From GAME’s perspective what’s very interesting is the way it is trying to develop its online offering and its reward card. I think GAME is doing the right things, particulary with pre-owned. It’s being more aggressive and making more noise.”
Investec’s David Jeary added: GAME’s strategy will require a step-change in its online and digital delivery, which will be margin dilutive, but offer its customers a more multi-channel offer. We retain our Buy stance.”