GameStop's Guidance Doesn't Impress
SAN FRANCISCO - Shares of video-games retailer
GameStop
(GME) - Get Report
slumped after the company beat analysts'first-quarter estimates but forecast earnings for the currentquarter and fiscal year that were merely in line with Street expectations.
Shares of GameStop were down $4.44, or 8.7%, to $46.43 in recent trading.
Profit for the quarter was $62.1 million, or 37 cents a share vs. $24.7 million, or 15 cents a share, a year earlier. Excluding items, the company earned 38 cents a share, beating analysts' expectations by 3 cents a share.
Revenue increased 41.8% to $1.81 billion, surpassing analysts' expectations of $1.75billion for the quarter.
Comparable-store sales increased 27.1% during the first quarter.
New video game software sales grew 72%. The top-five selling gamesduring the quarter were
Take-Two's
(TTWO) - Get Report
Grand Theft AutoIV
, with only five days of sales at the end of the quarter;
Super Smash Bros. Brawl
and
Mario Kart WII
from
Nintendo
;
Rainbow Six: Vegas 2
from
Ubisoft
; and
Electronic Arts'
(ERTS)
Army Of Two
, said GameStop.
"The installed base of video game consoles grew 34% in 2007, ornearly 31 million units, the highest incremental growth in the historyof the business, and we are forecasting that hardware unit sell-thruwill match these levels in 2008," said R. Richard Fontaine, chairmanand chief executive officer for GameStop in a statement.
During the first quarter, GameStop opened 210 stores and said itplans to open between 550 and 600 new stores in 2008. With half of thenew stores opening outside of the U.S., the international store base isset to grow by 25%.
For the second quarter, GameStop forecast comparable-store sales growthof 12% to 14%. EPS is expected to range from 26 cents to 28cents compared to earnings of 14 cents the yearbefore. Analysts are looking for EPS of 26 cents.
GameStop also raised its full-year EPS guidance to range from$2.30 to $2.39. That compares to Street expectations of $2.33.
Comparable-store sales are forecast to increase between 10% and12% for the full fiscal year.