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GameStop Warns of 33% to 35% First Quarter Sales Drop

GameStop estimates first-quarter sales fell 33% to 35% from a year earlier.

GameStop  (GME) - Get GameStop Corp. Class A Report shares were lower after the videogame retailer estimated that first-quarter sales fell 33% to 35% from a year earlier due to the shutdown caused by the coronavirus pandemic.

GameStop said it expected a net loss ranging $162 million to $172 million.

Shares of the Grapevine, Texas, company were down 4.8% to $4.26.

GameStop estimated global sales declined from 33% to 35% from the year-ago total of $1.5 billion. Analysts surveyed by FactSet were looking for revenue of $1.13 billion.

Comparable -sales are expected to fall 30% to 31%. Excluding stores that were closed during the first quarter due to the coronavirus outbreak, comparable-store sales are expected to show a decline of about 16% to 17%.

Roughly 76% of the company’s 1,802 international stores closed beginning in March. On March 22, GameStop closed all 3,526 of its U.S. locations, with about 65% of the locations conducting limited curbside pickup.

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Inventory is expected to drop by about 43%, or $500 million, to about $650 million compared with $1.1 billion a year ago. 

The company's Australian stores remained open during the first quarter and increased demand drove a roughly 35% comparable store sales boost.

As a result, GameStop said it expects the Australia-New Zealand segment to contribute a higher percentage of sales as compared to the prior year fiscal quarter, while the relative contribution from its Europe segment will decline. 

The company said it expected hardware sales to be a larger percentage of total sales, while software sales will be a smaller percentage in the first quarter compared with a year ago.

"Our Buy Online Pickup in Store capabilities enabled many of our stores to safely open for contactless curbside pickup," Chief Executive George Sherman said in a statement. 

"We have begun safely reopening our stores around the world as conditions and government regulations permit, and look forward to the day our fleet can be fully operational again."