) has lost much of its momentum since it reported holiday sales
results. Estimates have shown a downtrend since the company
trimmed its guidance. The company lowered its earnings outlook,
blaming sluggish sales of Xbox 360 and PlayStation 3 software
during the holiday period that resulted in a 22.5% drop in new
software category sales.
This Grapevine, Texas based company now anticipates
fourth-quarter earnings between $1.85 and $1.95 per share and
fiscal year 2013 earnings in the band of $2.96 to $3.06 per
share. Earlier, management had forecasted fourth-quarter earnings
in the range of $1.97 to $2.14 and fiscal year 2013 earnings
between $3.08 and $3.25 per share.
The company's performance could be attributable to the fact
that the videogame industry is highly competitive and shoppers
have many alternatives to buy software, hardware and other video
game accessories. Moreover, retail bigwigs have entered into the
videogame market, which could dent GameStop's sales and
The dismal new software category sales and trimmed guidance
triggered a downtrend in the Zacks Consensus Estimate, as
analysts become less constructive on the stock's future
performance. This is evident from the movement witnessed in the
Zacks Consensus Estimate that fell 6.8% to $3.02 for fiscal 2013
and 4.7% to $3.89 per share for fiscal 2014 in the past 60
However, on the brighter side, GameStop's global sales during
the nine-week holiday period ended Jan 4, 2014 jumped 9.3%, while
comparable-store sales rose 10.2%. New hardware sales surged
99.8%, whereas pre-owned category sales jumped 7% during the
period. Management now envisions comparable-store sales for the
fourth quarter and fiscal 2013 to dovetail with the upper end of
the previously provided guidance range.
The company continues to branch out and has evolved as a mixed
retailer of physical and digital gaming as well as electronics
products. The company's venture in digital, iDevice and gaming
tablet businesses would be accretive to its results. The
company's buy-sell-trade model of selling new games and buying
back used games and PowerUp Rewards program make it a popular
GameStop, which competes with
), currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Other better-ranked stocks worth considering in the retail
Foot Locker, Inc.
Finish Line Inc.
), both holding a Zacks Rank #2 (Buy).
AMAZON.COM INC (AMZN): Free Stock Analysis
FINISH LINE-CLA (FINL): Free Stock Analysis
FOOT LOCKER INC (FL): Free Stock Analysis
GAMESTOP CORP (GME): Free Stock Analysis
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