GameStop Falls as Holiday Sales Decline Prompts New View
GameStop Corp. (GME), the world’s largest video-game retailer, tumbled the most in more than seven months after the company narrowed its full-year same-store sales forecast, citing disappointing holiday results.
The shares fell 6.3 percent to $23.19 at the close in New York, for the biggest decline since May 17. The Grapevine, Texas-based company gained 4 percent last year.
GameStop, which in November announced it would close 200 stores because of a “tough video game market,” said in a statement today that comparable-store sales for the fiscal year ending this month will fall between 7.5 percent and 9 percent after holiday global sales declined 4.6 percent from a year earlier to $2.88 billion. The company previously forecast an annual sales drop of between 6 percent and 9 percent.
“GameStop experienced mixed results during the holiday selling period,” Chief Executive Officer Paul Raines said in the statement. “Our successful Wii U launch, strong digital growth and continued momentum in the mobile space were countered by a decline in store traffic.”
Total comparable-store sales, or those at stores open for at least a year, fell 4.4 percent in the nine-week holiday season ended Dec. 29, dropping 3.5 percent in the U.S. and 6.4 percent internationally, according to the statement.
While GameStop’s new forecast prompted Tony Wible, an analyst at Janney Montgomery Scott LLC, to trim his 2013 and 2014 profit estimates on “incremental weakness,” he reiterated his buy rating on the stock.
“We have been waiting for pullbacks in GameStop as great entry points on a controversial name,” Wible wrote in an investor note. “Digital receipts were up over 40 percent and iDevice sales continue to see momentum.”
He revised his per-share earnings estimates to $3.46, from $3.48, for fiscal 2013 and to $3.79, from $3.80, for the next year.
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