High Street specialist GAME saw a sales drop of 14.7 per cent for the eight week Christmas period to January 7, with like-for-like sales down 12.9 per cent.
UK and Ireland store sales were down 17.6 per cent, international stores down 12 per cent and online sales up 3.9 per cent.
For the 49 weeks to January 2012 the group saw a sales decline of 11.9 per cent, just ahead of the overall UK market which was down 13.1 per cent.
"Our industry had an incredibly tough 2011, and so did we," admitted CEO Ian Shepherd.
"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." That strategy includes becoming the European market leader for sales of PS Vita and Wii U, both due this year.
The high cost of advertising and marketing has impact overall margins, said the company, which expects to be down for the full year by around 190 basis points.
The retailer has closed 39 stores this year, and is on track to have 550 UK stores by 2013.
Is also noted that it may not be able to meet its EBITDA loan covenants, although it remains in "constructive dialogue with its lenders, who remain supportive".