Specialist video games retailer Game Group, which owns the high street chains Game and Gamestation, has seen shares tumble after announcing dire financial results today. It warned that continued poor results could mean it breaches its loan covenants.
Shares took a significant hit in early trading on the London Stock Exchange, dropping more than 26 percent to 4.97 pence, after the company announced that sales were around 15 percent worse than last year's figures. The worst figures were seen in the group's UK and Ireland stores, where Christmas total sales were down 17.6 percent overall.
As a result, the company may not be able to meet its EBITDA (earnings before interest, taxes, depreciation and amortisation) commitments to lenders, who could see this as a cue to demand earlier repayment of investments.
The retailer did maintain however that it was in a position to meet its debt service conditions satisfactorily, and that cash reserves of around £120 million should cushion the blow. According to a statement made today, the group is in "regular and constructive dialogue" with lenders, who "remain supportive".
Growth was however seen in online sales, with sales up 3.9 percent over last year.
Game Group chief executive Ian Shepherd remained upbeat however, stating: "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. "