- Revenue from new titles slumped 6% during fiscal year 2015
- Fewer big games in first quarter may hold back revenue
GameStop Corp., the world’s largest video-game specialty retailer, fell after fourth-quarter revenue missed analysts’ estimates and the company issued a forecast that also came up short.
Shares of the Grapevine, Texas-based company slumped 6.8 percent to $28.20 in late trading after being down as much as 8.3 percent. The stock had climbed 8 percent this year through Thursday in New York.
New game software sales slid 6 percent in the year ended in January, GameStop said in a statement. Earnings in the first quarter will be 58 cents to 63 cents a share, the company said, missing analysts’ projections of 70 cents. Fewer big games are being released in the period compared with a year ago, when Battlefield Hardline and Mortal Kombat X were on shelves. GameStop has diversified into other merchandise categories like mobile phones to counter the slump in games.
“What we’re excited about is that we built a diversified business that has allowed us to protect our earnings and revenue when our software sales have come down,” Chief Financial Officer Rob Lloyd said in an interview.
GameStop is feeling pressure as gaming shifts to the Web and fewer customers buy new titles on discs. Software sales will probably decline 5 percent to 10 percent this year while hardware sales slump 10 percent, before the effects of currency changes, the company said on a call. GameStop has tried to tackle digital head-on by selling downloads from its website and in stores. Such sales topped $1 billion for the year just ended.
Profit from online gaming is expected to reach 30 percent of operating earnings this year, up from 25 percent in 2015 and less than 20 percent the year prior, Lloyd said.
In the fourth quarter, sales rose 1.4 percent to $3.53 billion, missing estimates of $3.57 billion. Profit excluding some items rose to $2.40 a share. Analysts had predicted earnings of $2.27, the average of estimates compiled by Bloomberg.