GameStop's Earnings, Holiday-Quarter Forecast Disappoint

By Tess Stynes 

GameStop Corp. reported quarterly results that missed expectations and projected per-share earnings for the crucial holiday quarter that missed Wall Street's estimates, sending shares lower.

In recent after-hours trading, shares fell 12% to $38.50.

For the current quarter ending in January, the company forecast per-share earnings of $2.08 to $2.24 on sales at stores open more than a year in a range between a decline of 5% and growth of 2%. Analysts polled by Thomson Reuters expected per-share profit of $2.28.

For the year ending in January, the company lowered the upper end of its per-share earnings estimate by 15 cents a share and now expected $3.40 to $3.55. The company now expects sales growth at stores open at least a year between 2% and 5%, compared with its earlier view for growth between 6% and 12%.

The Grapevine, Texas-based company reported that sales at stores open at least a year fell 2.3%, below expectations for an increase between 1% and 5%.

"Overall, most of our major product categories performed very well" but third-quarter sales were hurt by the delayed release of "Assassin's Creed: Unity", Chief Executive Paul Raines said in the company's earnings release.

GameStop, which operates more than 6,600 stores, has been posting strong results buoyed by demand for new consoles from Sony Corp., Microsoft Corp. and Nintendo Co. In the latest quarter, hardware salesmore than doubled.

Used-game sales, which rose 2.6% in the quarter, have been an important part of GameStop's business, providing much higher margins than sales of new games and consoles.

For the period ended Nov. 1, GameStop reported a profit of $56.4 million, or 50 cents a share, down from $68.6 million, or 58 cents a share, a year earlier. Excluding expenses related to the sales and shutdown of some operations and other items, earnings fell to 57 cents from 58 cents. The company expected between 58 cents and 64 cents.

Revenue decreased 0.7% to $2.09 billion, below analysts' projections of $2.2 billion.

Write to Tess Stynes at [e-mail]

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