EA “concerned with the financial condition” of “major” European retail partner

By Stephany Nunneley
2 February 2012 14:15 GMT

EA said during its Q3 FY12 call to investors last night it has revised its Q4 outlook to a more conservative figure of $925 million to $975 million due to three underlying factors – one of which is “concern” over the financial condition of a European retail partner.

Speaking during the call, CEO John Riccitiello said the firm was “concerned with the financial condition of one of our major European retail partners,” which according to Riccitiello, could lead to both “increased bad debt and lost sales” for EA.

He never mentioned GAME by name specifically, but the UK retailer is obviously the one he was discussing.

Adding further color to the matter, CFO and EVP Eric Brown called the situation “isolated,” but agreed a negative outcome for the retailer “could adversely impact our Q4 results.”

Brown said other factors which led the firm to revise its Q4, were shipping more units than initially planned for for Star Wars: The Old Republic due to “strong” demand for the game; “moving an important social game launch from Q4 F’12 to Q1 F’13, and with it the associated profit”; and increased marketing spend in Q4 in order to take advantage of SWTOR momentum.

Riccitiello said GAME’s financial woes and the rest of these issues weren’t “material or consequential” for fiscal ’12, but taken together, may impact EA’s Q4.

“All in, we’ve delivered another strong quarter and expect to finish the fiscal year consistent with our original and our recently raised guidance,” he said.”

A report yesterday stated GAME’s credit insurance was in jeopardy, and today the firm confirmed it’s in talks with lenders to secure more funds.

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