GameStop Plunges on Lower Guidance - Analyst Blog
January 15 2014 - 10:50AM
Zacks
Shares of GameStop
Corp. (GME) plunged roughly 20% yesterday on lowered
earnings outlook as demand for Microsoft Corp.'s
(MSFT) Xbox 360 and Sony Corp.'s (SNE) PlayStation
3 software was soft during the holiday period. This resulted in a
22.5% drop in the videogame retailer’s new software category
sales.
This Grapevine, Texas based company
now projects fourth-quarter earnings between $1.85 and $1.95 and
fiscal-year 2013 earnings in the band of $2.96 to $3.06 per share.
The guidance provided fell short of the current Zacks Consensus
Estimate of $2.14 and $3.24 for the fourth quarter and fiscal 2013,
respectively. Also, this was enough to hurt investors’
sentiment.
Earlier, this Zacks Rank #3 (Hold)
stock had forecasted fourth-quarter earnings in the range of $1.97
to $2.14 and fiscal-year 2013 earnings between $3.08 and $3.25 per
share. In the coming days, we could witness a downtrend in the
Zacks Consensus Estimate and a revision in the Zacks’ Rank.
GameStop said that global sales
during the nine-week holiday period ended Jan 4, 2014 increased
9.3% to $3.15 billion. Total comparable-store sales rose 10.2%,
portraying an increase of 7.1% at the U.S. and 17.4% at
international locations buoyed by new video game console sales,
including Xbox One and PlayStation 4 that fueled a 99.8% surge in
new hardware sales.
GameStop, which competes with
Amazon.com Inc. (AMZN), now envisions
comparable-store sales for the fourth quarter and fiscal 2013 to
dovetail with the upper end of the previously provided guidance
range. The company had predicted comparable-store sales to increase
by 2% to 9% during the fourth quarter and by 1.5% to 4.5% during
the fiscal year.
The pre-owned category jumped 7%.
Management now anticipates gross margins for the pre-owned category
in the range of 46% to 49% for the fourth quarter and the fiscal
year. The Other category sales climbed 4.8%. Within this category,
digital receipts increased 14.9% to $207.3 million, while mobile
sales rose 23.8% to $94.8 million.
GameStop’s worldwide sales through
mobile, web-in-store, pick-up at store and ecommerce surged 57%.
Sales via mobile site jumped 47%, web-in-store and pick-up at store
sales together escalated over 120%, while sales through the
company’s website grew 37%.
The operator of 6,488 stores
repurchased 800,500 shares at a price $49.39 per share, aggregating
$39.5 million during the holiday period. The company informed that
at the end of the holiday period, it still had the authorization to
buy shares worth $467.1 million.
AMAZON.COM INC (AMZN): Free Stock Analysis Report
GAMESTOP CORP (GME): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
SONY CORP ADR (SNE): Free Stock Analysis Report
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