Game is expecting to post a drop in full-year sales after its retail sales in the UK fell 12.7% amid a “challenging trading environment”.

The video games specialist said in a pre-close update that group sales for the 53 week period to July 30 are forecast to fall 4% to £815m, compared with £866.6m the previous year.

Game, which issued a profit warning following a sluggish Christmas trading period, said it was poised to report an 8.6% decline in group retail sales, after sales within its Spanish business increased 7.4%.

The retailer’s gross transaction values slumped 10.8% in the UK and 5% on a group-wide basis.

Game’s Spanish arm, which now comprises 267 stores, also outperformed the UK on this front, with gross transaction values jumping 12.4% during the year.

The business said it has “implemented a wide-ranging action plan to improve” performance in the UK, including making cost savings and moving into the esports and gaming events business.

It has also acquired Ads Reality Limited, a technology company focused on visual recognition and augmented reality.

Game said it expects to post an adjusted EBITDA for the full year “within the range of current market expectations” of between £26.2m and £32.2m.

The retailer’s boss, Martyn Gibbs, insisted it was “well positioned” to benefit from new console launches, new virtual reality technology and the development of competitive and social gaming.

Gibbs added: “We continue to focus our efforts on maximising the potential of our core retail markets, driving operational improvements and efficiencies across the business and developing our broader consumer and enterprise gaming services to support deeper engagement with our customers, communities and supplier partners.

“We are well positioned to benefit from these exciting developments and have clear plans in place to drive our retail businesses forward while developing our strategic initiatives to support future growth.”

Game will post its full-year results for the 53 weeks to July 30 on October 13.