Ubisoft Beats Q2 Expectations Amid Retail Concerns

Ubisoft had a solid second quarter, handily beating its own estimates, thanks to the successful launch of Brothers in Arms: Hell's Highway and Soulcalibur IV, which it distributed in Europe. Ubisoft's sales for the first half of its fiscal year were up 31.5 percent over the same period of 2007 to €344 million ($440 million). In the second quarter alone, which ended September 30th, Ubisoft's sales reached €175 million ($224 million), an increase of 37.3 percent over last year. On the company's financial results call, Ubisoft CEO Yves Guillemot said that the company has seen some negative impact from the weak dollar against the euro, but sought to assuage investor concerns about September's weak NPD results by stressing they were expected and due to a lighter industry lineup than last year. "Retailers are fundamentally more bullish regarding video games than other consumer goods, for the holiday and in the long-term," said Guillemot. "Video games are a key growth driver for retailer business... [and retailers] continue to provide more and more support to serve space to the sector." Nonetheless, says Guillemot, "The consequences of the economic slowdown must not be underestimated." He explained that retailers are indeed being impacted, closely monitoring launch inventory levels in a more risk-averse way -- though this also means they reorder faster. Secondly, he says, "To attract business they offer more promotional deals, and third, small, non-specialist retailers are experiencing financial strain." Still, on the strength of its holiday lineup, which includes Far Cry 2, Prince of Persia and in particular Tom Clancy's EndWar -- which it says could sell 1 million units in its launch quarter -- in addition to a new slate of its casual games, the company raised its guidance. Ubisoft expects to close the year with €500 million for the third quarter ($640 million), and about €1050 million ($1.3 billion) for the full year overall. Ubisoft also says that providing steady downloadable content discourages consumers from re-selling games to retailers, and repeatedly mentioned an "unannounced title" it expects to be a major performer in 2009. "Our second quarter was another solid quarter for Ubisoft," says Guillemot. "We are now entering the crucial season with great excitement. We will introduce the most diverse lineup of our history, and we will truly provide a gaming experience for everyone." "The year is far from over and execution is key to our success, but our raised guidance demonstrates our confidence in the video game market as well as our capacity to perform."