On a GAAP basis, GameStop posted an EPS loss of $5.08 on net noncash goodwill and other impairment charges of $671.5 million.
The company’s CEO said:
Diligent operational efforts in a tough video game market as well as continued margin expansion of 200 basis points resulted in third quarter earnings exceeding expectations. We are now focused on delivering a successful holiday quarter driven by great titles, an unrivaled loyalty program, exciting new businesses and the Wii U launch.
The company guided fourth-quarter diluted EPS to a range of $2.07 to $2.47. The consensus estimate for the fourth quarter had been $2.16. For the full year, GameStop maintained its previous guidance for adjusted diluted EPS of $3.10 to $3.30. The consensus estimate for full-year EPS is currently $3.14. Same-store sales for the full year are expected to fall by 6% to 9%.
Same-store sales fell 8.3% in the third quarter due to “the longevity of the current console cycle and the difficult comparison of major new software titles released during the third quarter of 2012.” In other words, last year GameStop got a boost from new hardware and new games, both of which were absent this year. Nintendo’s new Wii U console is scheduled to launch in the United States this weekend.
GameStop did not call out its performance in online and mobile sales or profits. These are included in a category called “Other,” which saw revenues rise from $245.6 million in the third quarter of 2011 to $321.9 million this year, and profits rise from $105.6 million a year ago to $123.8 million this year. Gross margins in the “Other” category, however, fell from 43% a year ago to 38.5% this year. Maybe that’s why no mention.
Shares are essentially flat in early trading, at $23.50 in a 52-week range of $15.32 to $25.86. Thomson Reuters had a consensus analyst price target of around $25.00 before today’s results were announced.
Paul Ausick
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
