Video game retailer
) saw its market cap eroding 16.9% in the past one week after it
lowered its earnings outlook.
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This Grapevine, Texas-based company now projects fourth quarter
earnings between $1.85 and $1.95 and fiscal year 2013 earnings in
the band of $2.96 to $3.06 per share. The Zacks Consensus
Estimate fell 10.3% and 6.8% to $1.92 and $3.02 for the fourth
quarter and fiscal 2013, respectively in the past 7 days. This
led us to downgrade GameStop from a Zacks Rank #3 (Hold) to a
Zacks Rank #4 (Sell).
Shares crashed nearly 20% in a single day when the company
reported sluggish sales of
) Xbox 360 and
) PlayStation 3 software during the holiday period, which caused
a 22.5% fall in new software category sales.
GameStop declared that global sales during the nine-week holiday
period ended Jan 4, 2014 rose 9.3% to $3.15 billion. Total
comparable-store sales rose 10.2%, marking an increase of 7.1% in
the U.S. and 17.4% in international locations. The increase was
driven by new video game console sales such as Xbox One and
PlayStation 4 that drove a 99.8% surge in new hardware sales.
GameStop, which competes with
), 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 had predicted
comparable-store sales to increase by 2% to 9% during the fourth
quarter and by 1.5% to 4.5% during the fiscal year.
The pre-owned category sales rose 7%. Management now anticipates
gross margins for the pre-owned category to be 46%-49% for the
fourth quarter and the fiscal year. The Other category sales
climbed 4.8%. Within this category, digital receipts increased
14.9% to $207.3 million while mobile sales witnessed a 23.8% rise
to $94.8 million.
GameStop's worldwide sales through mobile, web-in-store, pick-up
at store and e-Commerce inflated 57%. Sales through mobile sites
rose 47%, web-in-store and pick-up at store sales together marked
an increase of over 120% and sales through the company's website
The operator of 6,488 stores repurchased 800,500 shares at a
price $49.39 per share, aggregating $39.5 million during the
holiday period. The company informed that at the end of the
holiday period, it still had the authorization to buy shares
worth $467.1 million.