Shares in Game Group plunged on the FTSE All Share in morning trading after the company swung into losses in its results for the half year ended 31 July.
Group revenue was reported as falling from £690.8 million in the first half of last year to £624.6 million.
Last year Game Group reported pre-tax profits of £10.8 million in the first half, however in the same period this year the group made a loss of £21.5 million.
|Before taxes and non-recurring costs Game went from a profit of £14.5 million last year to a loss of £18.8 million.|
Despite the losses Games said it would be holding its interim dividend at 1.88 pence per share.
The group said that its online business was performing well, with revenue up two per cent.
Peter Lewis, Chairman of Game, said, "Against the backdrop of a very challenging marketplace and an uncertain economy, we have increased market share in all of our territories since January and maintained our leading position in Europe.
"As expected, we have returned to our traditional seasonal trading profile with losses reported in the first half and all profits being made in the second half. The Group has made a loss before tax and non-recurring costs of £18.8m in the first half of the year, compared to a profit before tax and non-recurring costs of £14.5m in the previous half year.
"Whilst the Board remains mindful of the prevailing tough market conditions, we believe that the Group is taking the right steps to position itself ahead of the next pc and video games cycle. We will continue our focus on operational efficiency, maintaining customer loyalty, and expanding our multi channel proposition, while maximising market share on key product launches. We believe that the profile of products launching in the second half should play well to the specialist retailer and our business is ready to maximise these opportunities."
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "As investors have feared, deteriorating fortunes are clearly evident. Same store sales remain in negative double digit territory, with losses exceeding analyst expectations. Product price reductions made in order to enhance competitiveness are largely responsible, with intense competition, fewer blockbuster sellers and a structural shift towards the internet undermining the company.
"On the positive, management is taking action - a push towards online sales is being made, whilst the group's international business continues to be nurtured and costs cut. Nonetheless, today's results have done little to reassure investors, with the current 'strong hold' consensus opinion likely to come under pressure."
By 09:10 shares in Game Group were down 11.79 per cent on the FTSE All Share to 58.00 pence per share.