Electronics Boutique in poor health warning

Blaming price cuts for its diminishing margins, Electronics Boutique has issued a profit warning but will increase its presence in supermarket giant Sainsbury's stores in an attempt to reverse its fortunes.

Blaming price cuts for its diminishing margins, Electronics Boutique (EB) has issued a profit warning but will increase its presence in supermarket giant Sainsbury's stores in an attempt to reverse its fortunes.

The announcement followed recent interim results when EB reported a pre-tax loss of £3.3m on turnover up 19.3 per cent to £63.8m.

Gross margin has fallen from 32 to 26 per cent. PlayStation sales accounted for 30 per cent of the group's turnover but the market has seen the price of newly-released PlayStation titles steadily drop from the £44.99 price point at the beginning of 1999.

EB will hope to boost sales by extending its sales operation from eight Sainsbury's and Savacentre stores to a further 25 over the next fortnight.

"Price pressure on the PlayStation platform will make it difficult to achieve gross margin percentage similar to that achieved last year," a statement from EB concluded.

• Nintendo's interim results ended 30 September showed plunging pre-tax profit, down 70 per cent to Y20.2bn. Turnover was down five per cent to Y190.2bn. It blamed foreign exchange rates for the falls and issued a profit warning for the full year.

But SGi's full year results ended 30 June saw pre-tax profit rise to £1.69m from a loss of £3.29m last year. Turnover rose from £2.8m to £8m.