Game issued a trading statement on Tuesday in response to last week’s share sell-off that was triggered by a £5.4 million disposal of shares by directors.

The entertainment retailer said that, in its new financial year, it expects slower like-for-like growth of between 5 and 10 per cent against strong comparatives last year. Game also said that there would be a 50 to 100 basis point increase in gross margin.

Deputy chief executive and finance director David Thomas, one of last week’s sellers along with chief executive Lisa Morgan, was bullish about the company’s prospects.

He said: “If you look at our like-for-like sales performance, we can continue to achieve sales growth. I think that growth of between 5 and 10 per cent is still very healthy. He confirmed that the update was issued to “reassure” the market, as well as to provide a trading update.

Thomas said that there would be a decline in hardware as part of the sales mix, because of category deflation and that higher margin software would provide a profit boost during 2008.

Thomas discounted the threat from a resurgent HMV. “Game has about 650 stores in the UK and more than 400 internationally,” he said. “The UK market is undoubtedly very competitive, but for us it’s not just about the UK. We know that HMV has stated that it sees games as a growth area, but its focus is not solely on games – it has books and music. For Game, our focus is solely on games.”

Commenting on the appointment of internal candidates Tricia Brennan and Martyn Gibbs as managing directors of Game UK and Ireland and Gamestation respectively, Thomas said that the two businesses would be run separately but that a number of functions, such as property, would be handled jointly. Brennan and Gibbs will both report to Morgan.

Pali International analyst Nick Bubb described the update as reassuring and expected “good profits growth” this year.