GameStop Corp. (GME) - Get Report shares plunged Wednesday after the video game retailer posted weaker-than-expected first quarter sales and scrapped its regular dividend as gaming trends continue to develop online and key console releases are delayed into the second half of the year.

GameStop said earnings for the three months ending on May 4, the company's fiscal first quarter, came in at 7 cents per share, down 75% from the same period last year but still better than the 3 cents per share loss anticipate by analysts. Group sales, however, slumped 12% to $1.547 billion and missed Street forecasts, as gamers delayed new console purchases in advance of new PS4 and Xbox releases. 

GameStop also halted its quarterly dividend, a move that could save the company $160 million this year, as it plows into $436 million in outstanding debt that comes due in 2021.

"As I've been digging into our business, it's clear to me that we need to transform to remain a viable player in our industry, which is currently undergoing meaningful technological change," CEO George Sherman told investors on a conference call late Tuesday. "And while the industry grows and attracts new customers, our recent performance shows me that we have work to do to evolve and transform."

"We'll have a disciplined approach to capital allocation. We announced earlier today that our board has eliminated our quarterly dividend. The board did not take this decision lightly, and we remain committed to return capital to shareholders when it's prudent," he added. "That said, in the near term we are confident that redirecting capital towards debt reduction and reserving capital for successful transformation initiatives will put us in a better position to drive increased shareholder value over the long term."

GameStop shares were marked 33% lower Wednesday to change hands at $5.22 each, the lowest since March 2003 and a move that would lop more than $267 million from the Grapevine, Texas-based group's market value.

"The dividend elimination was not entirely surprising, and the move to pay down debt is prudent," said Credit Suisse analyst Seth Sigman. "That said, the implication that dollars may be reallocated to transformation initiatives, adds risk at a time when gross profit is already declining."

"Where that shakes out for 2020 will be key," Sigman added. "One other cash flow opportunity highlighted was reducing inventory as the company looks to de-clutter stores and focus on its more productive (stock-keeping units)."