The firm said demand for games had nose-dived even in the face of several high profile product launches – including the record-breaking Call of Duty: Modern Warfare 3.
Shares in the firm, which has 610 stores across the UK and Ireland, tumbled more than 46 per cent to 10.25p as it warned that like-for-like sales were expected to fall by at least 7 per cent this year, a significant change from its previous guidance which pointed to a drop of no more than 3 per cent.
Analysts warned that the retailer would now probably make an full-year loss.
The bleak update followed depressing figures from the Scottish Retail Consortium, which showed the crucial three-month festive trading period got off to a bad start in October, as like-for-like sales north of the Border slumped 1.5 per cent.
Game chief executive Ian Shepherd said: “The overall video games market remains very challenging, despite strong title launches, and our guidance … reflects the extraordinary economic times.”