GameStop released the earnings results from its third fiscal quarter before opening bell this morning, posting adjusted earnings of 54 cents per share and revenue of $2.016 billion. Analysts were expecting earnings of 59 cents per share and sales of $2.13 billion. In last year’s third quarter, the video game retailer reported sales of $2.09 billion and 61 cents per share in adjusted earnings.
Game Stop’s earnings rise, comparable sales fall
Reported earnings were 53 cents per share, compared to last year’s 50 cents. Comparable store sales fell 1.1% year over year, while total global sales fell $3.6%. Currency headwinds had a negative impact of 2 cents per share during the quarter. GameStop management said the reason the retail chain’s results were toward the low end of their guidance was because new software and hardware sales underperformed expectations. They also said that openings of some of their Technology Brands stores have been delayed.
In GameStop’s new video game segments, sales of new hardware fell 20.4% or 15.4% in constant currency. New software sales declined 9.3% or 4.2% on a constant currency basis. The retail chain said it faced difficult year over year comparisons with Destiny and Super Smash Bros. releases in last year’s third quarter.
Preowned sales rose 0.6% or 4.9% on a constant currency basis as GameStop saw growth in preowned sales for the Xbox One and the PlayStation 4. Excluding negative impact from currency translations, the quarter marked the seventh in a row in which the retailer saw growth in its preowned segment.
Revenues from Technology Brands rose 64.2% and drove a 31.1% increase in Mobile and Consumer Electronics sales.
GameStop’s outlook misses expectations
GameStop also released guidance that came up short of expectations this morning. Management expects fourth quarter comparable store sales to come in down by 1% to up by 6%. They project earnings of between $2.12 and $2.32 per share, compared to the consensus estimate of $2.37 per share.
For the full year, GameStop continues to expect earnings of between $3.66 and $3.86 per share and between a 2% and 6% increase in comparable store sales.
Shares of GameStop plunged in premarket trading after this morning’s earnings announcement, falling by as much as 16.31% to $33 per share.