Game Group's shares nearly halved to an all-time low yesterday after the chain posted another profit warning and admitted it is likely to breach banking covenant tests next month.
The retailer maintained that shoppers had continued to buy the latest releases, including Call of Duty: Modern Warfare 3, before Christmas but its underlying sales collapsed after consumers sharply slashed their expenditure on other products, such as peripherals and hardware. Ian Shepherd, chief executive, said: "The consumer came out for the hits but they did not come out for anything else."
He described 2011 as an "incredibly tough" year for the industry, but said it had "outperformed" the weak games market over Christmas.
Game's underlying sales in the UK and Ireland tumbled by 15.2 per cent over the 8 weeks to 7 January, a further decline on the 12 per cent fall over the longer 49-week period.
Mr Shepherd said: "I am verydisappointed to be giving outthese results."
Game expects to breach two of its three year-end banking covenants at the end of February, such as that relating to underlying profits and debt.
Shares in Game crashed by 2.95p, or 44 per cent, to an all-time low of just 3.8p. This suggests the City has genuine concerns about its future.
Game, which warned on profits in November, is working with Deloitte to deliver a turnaround plan for 2012.