GameStop Profit Tops Estimates on Mobile, Digital Games
GameStop Corp. (GME), the world’s largest video-game retailer, reported fourth-quarter profit that beat analysts’ estimates, led by digital and mobile products.
Net income rose to $261.1 million, or $2.15 a share, from $174.7 million, or $1.27, a year earlier, GameStop said in a statement today. Excluding an impairment charge related to property and other assets, profit was $2.16 a share. Analysts projected $2.09, the average of estimates compiled by Bloomberg.
In the fourth quarter, GameStop said digital revenue jumped 60 percent and it generated $100 million in mobile sales, countering “weakness in the core business.” Industry sales of physical game products are declining amid a consumer shift toward mobile play on smartphones and tablets.
The second half of the year is expected to be “strong” with the release of “Grand Theft Auto V” and a new console, Grapevine, Texas-based GameStop also said.
Total sales in the quarter ended Feb. 2 fell less than 1 percent to $3.56 billion.
Ahead of the second half, GameStop said it expects business “to be challenging as consumers postpone purchases leading up to the fourth-quarter console launch.”
For the fiscal year 2013, earnings per share will be $2.75 to $3.15, the company said. Analysts projected $3.38 a share, the average of 19 estimates, according to data compiled by Bloomberg.
Sony Corp. has said it plans to introduce its PlayStation 4 console in time for year-end holiday shoppers while Take-Two Interactive Software Inc. (TTWO)’s “Grand Theft Auto V,” the latest title in the top-selling series, will go on sale in September.
“Fiscal 2013 guidance is materially below expectations, but we expect the 2H of the year to improve due to GTA V and new console launches,” Michael Olson, an analyst with Piper Jaffray Cos. in Minneapolis, said today in a note. Olson rates the shares overweight, the equivalent to a buy rating.
Retail sales now account for about 50 percent of total U.S. consumer spending on games, Liam Callahan, an NPD Group Inc. analyst, said this month.
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