), the video game and entertainment software retailer, recently
posted third-quarter 2012 adjusted earnings of 38 cents a share,
beating the Zacks Consensus Estimate of 32 cents, but falling
2.6% from 39 cents earned in the prior-year quarter.
The company reported a decline in its top line and
comparable-store sales due to the lack of significant game title
The Grapevine, Texas-based GameStop posted total revenue of
$1,772.8 million, down 8.9% from the year-ago quarter, and also
fell short of the Zacks Consensus Estimate of $1,791 million.
By sales mix, new video game hardware sales plunged 33.4% to
$184.8 million, whereas new video game software sales dropped
12.4% to $769.8 million. Moreover, used video game products sales
declined 8.9% to $496.3 million. However, sales in other category
jumped 31.1% to $321.9 million.
Within other category, Digital revenue increased 31.8% year
over year to $127 million, whereas Mobile sales came in at $43.2
million. GameStop expects mobile sales to range from $150 to $200
million during fiscal 2012.
The company is extending its mobile electronics business by
providing trading services for a varied range of Android tablets.
Management is banking on the increasing demand for Android
tablets to drive customer traffic and thereby boosting the
company's top line.
During the quarter, gross profit fell 2.7% to $557.4 million.
However, gross margin expanded 200 basis points to 31.4%,
reflecting a contraction in cost of sales as a percentage of
total revenue coupled with a rise in new businesses. Adjusted
operating income dropped 8.8% to $75.3 million, while adjusted
operating margin remained flat at 4.2%.
GameStop ended the quarter with cash and cash equivalents of
$366.4 million and net receivables of $49.6 million. During the
quarter, the company bought back 3.7 million shares at $20.59
each, at an aggregate of $76.8 million.
The company announced a new share repurchase program worth
$500 million, overriding the existing program which had $242
million left at its disposal. It also announced a quarterly
dividend of 25 cents a share, to be paid on December 12 to
shareholders of record as of November 28.
For fiscal 2012, GameStop anticipates comparable-store sales
to decrease between 6% to 9%. However, GameStop continues to
expect fiscal 2012 earnings in the range of $3.10 to $3.30 per
share. For the fourth quarter of 2012, GameStop expects
comparable store sales in the range of -7% to 1%. Earnings are
expected to be in the range of $2.07 to $2.27 per share.
Currently, we have a long-term Neutral recommendation on
GameStop. Moreover, GameStop, which faces stiff competition from
), holds a Zacks #3 Rank that translates into a short-term Hold
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