GameStop, No. 1 Gaming Store, Predicts Disappointing Holiday Profit
GameStop, the largest video- game specialty retailer, tumbled as much as 15% after third-quarter results fell short of analysts' estimates and the company predicted disappointing holiday profit.
Revenue in the quarter was held back by Ubisoft Entertainment's decision to delay the release of "Assassin's Creed Unity," GameStop said yesterday in a statement. The company also experienced a faster-than-expected decline in sales of older-generation hardware and software following the introduction of new game machines from Sony and Microsoft a year ago.
"The shift of 'Assassin's Creed' impacted our quarter by 5 cents per share," CEO Paul Raines said on a conference call with analysts.
Revenue for the quarter fell almost 1% to $2.09 billion. The game was released in the U.S. on Nov. 11, two weeks later than previously planned.
Earnings for the period ended Nov. 1, excluding special items, fell to 57 cents a share from 58 cents a year earlier, GameStop said. Analysts were forecasting 61 cents, the average of estimates compiled by Bloomberg. Analysts were projecting $2.2 billion in revenue.
Shrinking sales of hardware and software for older Xbox 360 and PlayStation 3 models were a factor, with sales of those products declining almost 58 percent, executives said on the call.
GameStop officials also said they're monitoring developments in labor talks between West Coast ports and longshoremen. A work slowdown stretching from San Diego to the Canadian border may affect hardware sales, they said.
For the current fourth quarter, GameStop forecasts profit will rise as much as 19% to $2.08 to $2.24 a share, compared with analysts' estimates of $2.30. The company said comparable-store sales will range from a decline of 5% to a gain of 2%.
Mr. Raines said he has returned to work full time after undergoing surgery to identify and remove a small cancerous tumor from his brain in August.
"My treatments have gone very well and I am blessed to say that I had excellent results on my follow-up visit to Duke and Baylor last week," he said on a conference call.
~ Bloomberg News ~