Game UK & Eire like-for-likes slumped 15.2% in the 8 weeks to January 7 as the challenging conditions in the games market continue to take their toll.
The games retailer said its bank remains “supportive” despite it cautioning that it may not meet its EBITDA covenants, which are tested on February 27.
“The Group continues to be in regular and constructive dialogue with its lenders, who remain supportive,” said Game.
Group like-for-likes fell 14.7% while international fell 12% in the 8 week period.
In the 49 weeks to January 7 group like-for-likes fell 11.9%, which Game said was better than the average market performance, where like-for-likes were down 13.1%.
Full year like-for-likes are expected to be “no better” than -10.3%.
Game said its gross margins has been hit as a result of promotional activity launched in the face of “challenging market conditions”. Full year gross margins are expected to be down by about 190 basis points.
Game expects to benefit from the launches of the PlayStation Vita February 22, and the Nintendo Wii U, which is scheduled to launch later in the year.
Game chief executive Ian Shepherd said: “Our industry had an incredibly tough 2011, and so did we.
“We remain the market leader and have a clear strategy which will return the business to growth. We are adapting to the changing market and are well prepared for the next hardware cycle.”