GameStop posts higher 1st-quarter net income on solid game sales but outlook drags sharesBy AP
Thursday, May 20, 2010
GameStop posts higher 1Q net income, sales
NEW YORK — GameStop Corp., the world’s largest video game retailer, said Thursday its fiscal first-quarter net income climbed, boosted by strong sales of popular games like “Battlefield Bad Company 2″ and “God of War III.”
For the three months ended May 1, GameStop earned $75.2 million, or 48 cents per share, up 7 percent from $70.4 million, or 42 cents per share, in the same period a year earlier.
Revenue rose 5 percent to $2.08 billion from $1.98 billion.
Analysts, on average, were expecting a profit of 47 cents per share on revenue of $2.03 billion, according to a survey by Thomson Reuters.
GameStop said its sales at stores open at least a year — a key measure of retailer performance — declined 1.6 percent during the quarter due to lower console prices and supply constraints.
Tony Bartel, executive vice president of merchandising and marketing, said the company gained market share during the quarter, which helped it perform better than the overall industry. Sales of new software at GameStop grew 13 percent during the quarter, while the overall industry saw a decline.
This suggests that “that GameStop’s consumer base remains loyal and active despite overtures from big box and online retailers,” said Colin Sebastian, an analyst with Lazard Capital Markets, who kept a “Buy” rating on the company.
Hardware was the downside of the quarter, Bartel said, but added that was “probably to be expected” given the success of last year’s launch of Nintendo’s handheld DSi gaming system.
In a rare step for brick-and-mortar retailers, GameStop is making a push into selling digitally downloadable video game content in its stores. The company said it will start selling the downloads in a group of test stores starting at the end of May.
Downloads of extra video game content are an increasingly important revenue source for game companies. They extend the life of $60 packaged titles because gamers have new chapters to play through.
Looking ahead to the current quarter, GameStop said it expects earnings of 25 cents to 27 cents per share. Analysts are expecting a profit of 29 cents per share.
For the third quarter, it expects a profit of 38 cents to 41 cents per share. Analysts are predicting a profit of 34 cents a share.
The company reaffirmed its full year guidance for earnings of $2.58 per share to $2.68 per share. Wall Street is expecting a profit of $2.63 per share for the fiscal year ending January 2011.
Shares fell 32 cents to $20.95 in afternoon trading.
Tags: Earnings, Entertainment And Media Technology, Games, New York, North America, Recreation And Leisure, United States