GameStop posts higher 3Q earnings, revenue
GameStop Corp., the world's largest video game retailer, said Thursday its fiscal third-quarter net income climbed as sales of popular new titles such as "Halo: Reach" and "Fallout: New Vegas" boosted revenue.
Nonetheless, GameStop's shares retreated as the company's revenue was slightly below what analysts had expected.
For the three months ended Oct. 30, GameStop earned $54.7 million, or 36 cents per share, up 5 percent from $52.2 million, or 31 cents per share, in the same period a year earlier.
Excluding debt retirement expenses, GameStop earned 38 cents per share in the latest quarter, inching past Wall Street's expectations.
Revenue climbed 4 percent to $1.9 billion from $1.83 billion.
Analysts, on average, were expecting earnings of 37 cents per share on slightly higher revenue of $1.95 billion, according to a poll by Thomson Reuters.
GameStop said its sales at stores open at least a year — a key measure of retailer performance — grew 1.1 percent. U.S. sales on this basis grew 5.3 percent. The company said weak hardware sales hurt international sales.
Sales of new game software jumped 9 percent during the quarter at a time when numbers from the NPD Group shows overall U.S. video game sales declining, said CEO J. Paul Raines in an interview. He added that GameStop feels good about its U.S. business, and although international markets are recovering more slowly, they are making progress.
GameStop raised its full-year guidance to $2.63 to $2.69 per share from $2.58 to $2.68 per share, excluding debt retirement costs. Analysts are expecting earnings of $2.62 per share.
For the current quarter, which includes record-breaking sales of the blockbuster "Call of Duty: Black Ops," the company is forecasting earnings of $1.53 to $1.59 per share. Analysts are predicting $1.51 per share. Besides that game, Microsoft Corp.'s Kinect and Sony Corp.'s Move controller are expected to drive holiday sales higher, along with "Assassin's Creed," and the latest "Gran Tourismo" and "Donkey Kong" games.
GameStop has been working to grow its digital business — selling online content for games in its stores and online — as more and more of its customers are consuming games this way. In the third quarter, close to 10 percent of in-store transactions included some sort of digital content in addition to (or instead of) a physical video game or game system, the company said. This is up from 5.3 percent in the second quarter.
Shares of GameStop, which is based in Grapevine, Texas, fell 76 cents, or 3.6 percent, to $20.25 in afternoon trading. The stock has traded in the 52-week range of $17.12 and $26.05.