Video game retailer GameStop Corp. (NYSE: GME) reported earnings this morning, and there were really no big surprises. The company had already said EPS would be $0.54. Revenues were a bit light, at $2 billion compared with a consensus estimate of $2.05 billion.
Compared with the same period a year ago, total sales were down -12.2% and comparable store sales were down -12.5%. In its earnings report the company said:
Despite slower store traffic during the quarter, we achieved our earnings target due primarily to gross margin expansion and positive profit contributions from our pre-owned, mobile and digital businesses. We expect those segments to fill the profitability gap as we transition to the new console cycle.
The company’s revenues were lower in all of its categories, but profits were higher in two of the four, with new hardware and new software profits falling year-over-year. The company’s “Other” category, which includes digital and mobile businesses, grew 23%. Mobile contributed $12 million in quarterly revenue and GameStop said that amount is on target for the company to reach $150-$200 million in mobile sales for 2012. All the company’s hopes are tied up in a big holiday season.
The company’s forecast will devour the share price today. GameStop forecast second quarter sales down -11% to -5% and EPS of $0.10-$0.18. The consensus EPS estimate had been $0.26, less than half this quarter’s EPS. The company maintained its full-year EPS guidance of $3.10-$3.30, with the consensus analyst estimate of $3.20 right in the middle.
GameStop will need a miracle to reach those numbers. By the company’s own plan it will be less than a third of the way to its EPS target at the end of the first half of the fiscal year. Even if the company equals last year’s EPS for the second half of the year, it will still fall way short of the current guidance.
Shares are down -9.2% at $18.92 in the first twenty minutes of trading this morning. The stock’s 52-week range is $18.34-$28.66.
Paul Ausick
Travel Cards Are Getting Too Good To Ignore (sponsored)
Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.
We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.
It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.
We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.