GameStop dips as hardware sales slip
By Staff -- Gifts and Dec, 8/21/2009 10:44:00 AM
GRAPEVINE, Texas—Video game retailer GameStop Corp. saw its second quarter sales slip 3.7 percent on a double-digit decline in same-store sales.
For the three months ended August 1, 2009, GameStop sales were $1.74 billion, down from $1.80 billion in the prior year’s quarter. Despite gaining over 200 basis points in new video game market share during the quarter, comparable store sales decreased 14.1 percent due to lower new console unit sales, a lack of strong new software titles compared to last year’s record releases and customer caution due to the continued weak economy, the company said.
Net earnings were $38.7 million, representing the second highest summer quarter in GameStop history, but a 32.3 decrease compared to net earnings of $57.2 million in the prior year period. Diluted earnings per share were $0.23, compared to $0.34 in the prior year quarter, when earnings per share grew a whopping 162 percent.
“Due to the effects of the recession and strong prior year comparisons, the video game industry experienced a sharp decline in consumer spending during the quarter,” said Daniel DeMatteo, GameStop CEO. “Looking ahead, as the new title release schedule improves, we expect positive earnings growth in the back half of the year.”
The top five selling games during the quarter were THQ’s UFC 2009 Undisputed, Activision’s Prototype, EA’s Fight Night Round 4 and NCAA Football 2010, and Atari’s Ghostbusters. Under-performing titles included Bioshock 2, StarCraft II and Splinter Cell: Conviction, the company said.
New software sales in the second half are expected to increase over the prior year period, led by releases such as Call of Duty: Modern Warfare 2, Assassin’s Creed 2 and Halo 3: ODST, the company said.
For the third quarter of fiscal 2009, GameStop is forecasting diluted earnings per share to range from $0.27 to $0.33, as compared to $0.28 in the prior year period, despite comparable store sales projections that see same-sales falling from 6 to 11 percent.
For the fourth quarter of fiscal 2009, GameStop is forecasting diluted earnings per share to range from $1.47 to $1.65, as compared to $1.39 in the prior year period. Comparable store sales are projected to range from -7 percent to -1 percent.
For fiscal 2009, GameStop is lowering diluted earnings per share guidance from the previously communicated range of $2.83 to $2.93 to a range of $2.40 to $2.64, representing annual EPS growth of flat to 10 percent. Comparable store sales are now projected to range from 4 to 8 percent down in fiscal 2009.
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