Stripping out sales of the PlayStation 3, which launched on March 23, UK and Ireland like-for-like sales remained strong at 24.6 per cent.
Game chairman Peter Lewis said: 'Consumer demand remains strong for all formats - particularly the Nintendo Wii. However, the UK trading environment continues to be very competitive, with retailers expanding their PC and video games offer to capitalise on the growing market.'
Lewis added that higher volumes of new-generation platforms will increase the proportion of hardware sales for the year to January 2008, but warned that gross margins would be hit because hardware has lower margins than software.
He added: 'The acquisition of Gamestation will also affect margins, because Gamestation has traditionally operated on lower margins than Game. Taken together, the board anticipates that gross margin for the half-year will be about 230 basis points lower than the same period last year and, for the full year, it will be about 250 basis points lower than last year.'
Game expects to report a net profit before tax of between£1 million and£3 million for the half-year to July 2007, before non-recurring costs relating to the acquisition of Gamestation.
The group plans to open 50 new stores, mainly in international markets, before the key Christmas trading period.
Separately, the retailer expects the Office of Fair Trading to complete its initial review of the acquisition of Gamestation by the end of July.