Financial Performance

GameStop Misses Estimates, Exploring Sale

The retailer believes it can still "leverage our industry-leading position to drive growth in the second half" of the year.
Matthew HellerSeptember 7, 2018
GameStop Misses Estimates, Exploring Sale

GameStop reported quarterly earnings that missed analysts’ estimates but confirmed it was exploring a “possible transaction” with third parties.

For the second quarter, the world’s largest video game and gaming console retailer earned an adjusted 5 cents per share, down from 15 cents a year earlier. Analysts tracked by FactSet had expected earnings of 8 cents a share.

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Revenue fell to $1.65 billion from $1.69 billion a year earlier but that was ahead of the $1.62 billion analysts were projecting. Comparable store sales fell 0.5%, reflecting a 2.4% gain in the U.S. and a 6.4% decline internationally.

“Our second-quarter results were in line with our expectations and highlighted by solid growth in new hardware, accessories and collectibles,” GameStop CFO Rob Lloyd said in a news release.

He noted that “an exciting slate of titles” is scheduled to launch in the second half of the year, adding, “The anticipation around the upcoming video games across several franchises is extraordinary and we remain well positioned to leverage our industry-leading position to drive growth in the second half.”

As Wccftech reports, “The gaming industry’s real numbers come in the second half of a year, and GameStop is no exception to this rule as there are plenty of high-profile, AAA titles being released in the coming months.”

“Investors are hopeful for a winter boost and could see some potential and relevance left in the retailer,” the publication said.

GameStop has been hit by competition from digital downloads and online shopping. In its latest earnings report, the company confirmed it “continues to engage with third parties regarding a possible transaction as part of a comprehensive review of strategic and financial alternatives initiated by the company’s board of directors.”

Dan DeMatteo, executive chairman of the board, said the alternatives include, but are not limited to, “a potential sale of the company.”

“There very well may be some sort of value remaining” in the company to interest a potential buyer, Wccftech said.

For the full year, GameStop reiterated its full-year outlook, which calls for a sales decline of 2% to 6%.

Photo: Getty Images