UPDATE 2-Game over for Game bosses as profit slumps

* CEO Lisa Morgan, UK COO Terry Scicluna quit

* Interim CEO says hiatus does not make co vulnerable to bid

* FY underlying profit 90.4 mln stg vs f’cst 87.5 mln stg

* 11 weeks to April 17 lfl sales down 14.4 pct

* Shares down 12 pct

(Adds detail, non-exec director, analyst comments, shares)

By James Davey

LONDON, April 21 (BestGrowthStock) – British computer games retailer
Game Group (GMG.L: ) said its two most senior executives were
quitting as it posted a 27 percent fall in year profit that
reflected a declining gaming market and intense competition.
Game, which in January issued a second profit warning in
just over a month after poor Christmas sales, said Lisa Morgan
had stepped down as CEO.

Chris Bell, the senior independent non-executive director
and a former CEO of bookmaker Ladbrokes (LAD.L: ), would replace
her on an interim basis by while a new CEO is sought.

The firm said UK chief operating officer Terry Scicluna also
intends to step down but will remain for a handover period.

Sector analysts have long speculated on a possible takeover
bid for Game from U.S. peer GameStop (GME.N: ) to give the U.S.
group a British presence.

However, Bell said he did not think the management hiatus
made Game vulnerable.

“The good thing is I’m able to step in and look after the
company for a period,” he told reporters.

“The very real strength of Game is through its strength and
breadth of management below board level … So I don’t see that
as an issue,” he said.

Shares in Game, which have fallen 42 percent over the last
year, were down 11.6 percent at 0914 GMT, valuing the business
at 313 million pounds ($481.9 million).

“In light of this performance we anticipate that consensus
PBT (pretax profit) estimates for the current year of 73.4
million pounds may come under some pressure,” said Singer
Capital analyst Matthew McEachran.

“This degree of management change at a time when the
business is facing tough conditions is likely to be unsettling.”

Game, which trades from 1,380 outlets in nine European
countries and Australia, made an underlying pretax profit of
90.4 million pounds in the year to Jan. 31.

That compares with analysts’ consensus estimate of 87.5
million pounds, according to Thomson Reuters I/B/E/S, and a
record 124 million pounds in the previous year.

Total sales fell 10 percent to 1.77 billion pounds as the
global PC and video games market declined by over a fifth and
competition from supermarkets and online players increased.

Sales at stores open over a year fell 15 percent and were
down 14.4 percent in the 11 weeks to April 17.

Despite poor current trading the firm said it remained
confident about future prospects, raising its dividend 5 percent
to 5.78 pence.

It will close 62 of its 677 UK stores and rationalise
further in coming years while limiting new international
openings.

Game plans to invest in the growing e-commerce and digital
download markets and also hopes to get a boost from new
technology launches this year, including Microsoft’s (MSFT.O: )
Project Natal, Sony’s (6758.T: ) PlayStationMove and 3D gaming
from Nintendo (7974.OS: ) and Sony.

Stock Market

(Editing by Mark Potter and Michael Shields)

UPDATE 2-Game over for Game bosses as profit slumps