GameStop shares fall after 4Q results

GameStop shares fall after lower-than-expected 4th-quarter results despite console launches

Associated Press

GRAPEVINE, Texas (AP) -- Shares of GameStop Corp. took a hit Thursday after the video game retailer reported lower-than-expected results for the fourth quarter, which included the key holiday sales period and marked the launch of two new game consoles.

GameStop earned $220.5 million, or $1.89 per share, for the three months that ended on Feb. 1. That's down 16 percent from $261.1 million, or $2.15 per share, in the same period a year earlier. Excluding special items, adjusted earnings were $1.90 per share in the latest quarter.

Revenue rose 3 percent to $3.68 billion from $3.56 billion. The Xbox One from Microsoft Corp. and the PlayStation 4 from Sony Corp. launched in November and were the main reasons for GameStop's revenue increase.

Analysts, on average, were expecting earnings of $1.93 per share on revenue of $3.78 billion, according to a poll by FactSet.

Quarterly sales in stores open at least a year — a key metric of a retailer's health — rose 7.8 percent.

For the current quarter, GameStop said it expects revenue to grow by 7 percent to 10 percent from $1.87 billion a year earlier, with earnings per share between 55 cents and 60 cents. Analysts had expected revenue of $2.04 billion, an increase of 9 percent, and earnings per share of 53 cents.

Full-year sales are expected to grow 8 percent to 14 percent and earnings per share are expected to amount to between $3.40 and $3.70. Analysts expect an annual profit of $3.76 per share, on average.

GameStop also said it expects to close 2 percent of its stores in 2014 but did not give a number or say where the closing stores are located. GameStop's website says the company has 6,614 stores, so 2 percent would amount to about 132 locations.

The move comes several weeks after Wal-Mart Stores Inc. announced it would expand its trade-in program for used video games. The world's largest retailer plans to let customers trade in their used video games at 3,100 Wal-Mart stores in exchange for credit toward the purchase of other items.

Shares of Grapevine, Texas-based GameStop fell 6.5 percent, or $2.51, to $36.39 in morning trading. The stock is down about 26 percent in the year to date.

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