) recent dismal holiday sales performance on account of weak
store traffic count that compelled it to trim its forecasts
triggered a downward trend in the Zacks Consensus Estimates. A
negative sentiment was palpable among the analysts covering the
stock who tweaked their estimates to better align with the
Holiday sales for the nine-week period ended Dec 29, 2012
dropped 4.6% to $2.88 billion. Comparable-store sales fell 4.4%,
reflecting a decline of 3.5% and 6.4% at its U.S. and
international comps, respectively.
The disappointing holiday sales results persuaded management
to become more cautious on their outlook, which now envisions
comparable-store sales to decrease between 4% and 7% during the
fourth quarter and in the range of 7.5% to 9% in fiscal 2012.
Earlier, GameStop had projected comparable-store sales in the
range of negative 7% to a positive 1% for the fourth quarter, and
to decline between 6% and 9% in the fiscal year.
Grapevine, Texas-based GameStop, also restricts its
fourth-quarter fiscal 2012 earnings outlook at the lower-end of
the previously provided guidance range of $2.07 to $2.27 per
Consequently, the Zacks Consensus Estimates have been
portraying a downtrend. The Zacks Consensus Estimate for the
fourth quarter of fiscal 2012 dropped 3.2% to $2.09 per share,
whereas for the first quarter of fiscal 2013 it fell by 4.8% to
59 cents in the last 7 days. For fiscal 2012 and 2013, the Zacks
Consensus Estimates dipped by 1.6% and 0.3% to $3.14 and $3.41
per share, respectively, over the same time frame.
GameStop, which competes with
), now holds a Zacks Rank #3 (Hold). The downward revision in the
estimates in the past 7 days pushed the Zacks Rank down to #3
The slump in the video gaming industry persists due to
increased online gaming activities, and shifting preferences
toward tablets and mobile phones from traditional game consoles.
Consumers increasing accessibility to video games and PC
entertainment software over the Internet could hit the sales of
packaged goods and used games, and impede future growth.
Consequently, GameStop continues to branch out and has
reinvented itself as a mixed retailer of physical and digital
gaming and electronic products. The company's venture in digital,
iDevice and gaming tablet businesses would be accretive.
Currently, we have a long-term Neutral recommendation on the
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GAMESTOP CORP (GME): Free Stock Analysis
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