Bloomberg News

GameStop Profit Tops Estimates on Mobile, Digital Games

March 28, 2013

GameStop Corp. (GME:US), the world’s largest video-game retailer, reported fourth-quarter profit that beat analysts’ estimates, led by digital and mobile products.

Net income rose to $261.1 million, or $2.15 a share, from $174.7 million, or $1.27, a year earlier, GameStop said in a statement today. Excluding an impairment charge related to property and other assets, profit was $2.16 a share. Analysts projected $2.09, the average of estimates (GME:US) compiled by Bloomberg.

In the fourth quarter, GameStop said digital revenue jumped 60 percent and it generated $100 million in mobile sales, countering “weakness in the core business.” Industry sales of physical game products are declining amid a consumer shift toward mobile play on smartphones and tablets.

The second half of the year is expected to be “strong” with the release of “Grand Theft Auto V” and a new console, Grapevine, Texas-based GameStop also said.

GameStop rose (GME:US) 5.8 percent to $27.97 at the close in New York. The stock advanced 11 percent this year compared with a 10 percent gain for the Standard & Poor’s 500 Index.

Total sales in the quarter ended Feb. 2 fell less than 1 percent to $3.56 billion.

Ahead of the second half, GameStop said it expects business “to be challenging as consumers postpone purchases leading up to the fourth-quarter console launch.”

Holiday Shoppers

For the fiscal year 2013, earnings per share will be $2.75 to $3.15, the company said. Analysts projected $3.38 a share, the average of 19 estimates (GME:US), according to data compiled by Bloomberg.

Sony Corp. has said it plans to introduce its PlayStation 4 console in time for year-end holiday shoppers while Take-Two Interactive Software Inc. (TTWO:US)’s “Grand Theft Auto V,” the latest title in the top-selling series, will go on sale in September.

“Fiscal 2013 guidance is materially below expectations, but we expect the 2H of the year to improve due to GTA V and new console launches,” Michael Olson, an analyst with Piper Jaffray Cos. in Minneapolis, said today in a note. Olson rates the shares overweight, the equivalent to a buy rating.

Retail sales now account for about 50 percent of total U.S. consumer spending on games, Liam Callahan, an NPD Group Inc. analyst, said this month.

To contact the reporter on this story: James Callan in New York at jcallan2@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • GME
    (GameStop Corp)
    • $41.24 USD
    • -0.54
    • -1.31%
  • TTWO
    (Take-Two Interactive Software Inc)
    • $22.29 USD
    • 0.00
    • 0.0%
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