Analysts are divided over entertainment retailer Game’s prospects after a sales plunge shocked the market.

Total group sales slumped 9.1 per cent and group like-for-likes tumbled 15.4 per cent in the 21 weeks to June 27. In the UK and Ireland, total sales slid 12.4 per cent and like-for-likes declined 15.8 per cent, which means they plummeted by about 26 per cent in the last 10 weeks of the period. International sales were down 1.1 per cent while like-for-likes dropped 14.4 per cent.

Game chief executive Lisa Morgan said the figures were in line with Game’s own expectations, given the strong comparatives it was up against from the same period last year, when like-for-likes rocketed 25 per cent. Market share was maintained or increased in every market.

Morgan said: “We’re happy. The first quarter last year was record breaking for the industry. It was quite phenomenal.”

But UBS analyst Andrew Hughes said the figures were weaker than expected. “The market seemed poorly prepared for the news,” he said, voicing concerns over the product cycle, competition and “disintermediation”, as more consumers buy from the manufacturer.

KBC Peel Hunt retained its sell recommendation. Analyst John Stevenson pointed out that although Game has “maximised the opportunities of the console cycle” the “threat of online gaming remains”. A further threat may come from this autumn’s launch of the PSP Go – Sony’s hand-held machine that only plays Sony downloaded games.

However, Investec analyst Natalia Marisova said Game remains a “well-managed business with solid prospects”. Seymour Pierce analyst Freddie George said he was “confident that profits will recover from the first half” and thought last week’s selling was overdone.

Pali International analyst Nick Bubb said: “We wouldn’t give up on the second half, given the exciting new software line-up. Game remains an obvious bid target for the US giant GameStop, so this is the wrong time to give up on our buy.”

Morgan said the software schedule for the second half is “pretty exciting” with titles including Wii Fit Plus and DJ Hero due to be released. She also anticipated a PS3 price drop in the second half, which should drive sales.

Game expected to deliver first-half pre-tax profits “in line with plan” at between £13m and £16m, while generating synergies between the Game and Gamestation brands of £16m, as well as full-year gross margin gains of 150 to 175 basis points.