GameStop (GME) Shares Sells off After Mixed 4Q Results
Shares of GameStop Corporation (GME) were trading off -1.92 or -6.34 percent to $28.35 per share in Monday’s premarket after the company announced fourth quarter earnings on Thursday after the market close. The company beat estimates on earnings per share but fell short on revenue and guidance. GameStop stock closed at $30.27 per share, down -0.10 or -0.33 percent in Thursday’s regular trading session.
Grapevine, Texas based GameStop Corporation is a large U.S. based multinational entertainment software and videogame retailer.
In addition to its stores, GameStop’s consumer network includes the Kongregate.com, gamestop.com and thinkgeek.com websites and Game Informer magazine, a digital video game publication. The company’s Technology Brands segment includes simplymac.com, which operates 76 stores that sell Apple products exclusively, and springmobile.com, which sells post paid AT&T services and wireless products.
For the company’s fourth quarter ended on January 31st, 2016, GameStop reported net earnings of $247.8 million or $2.36 per diluted share versus net earnings of $244.1 million or $2.23 per share in the same period one year ago. Fourth quarter results included a $6.6 million or $0.04 per share charge related to the company’s closure of its Puerto Rico stores and impairments.
With the exclusion of the charges, the company’s adjusted net earnings came to $251.6 million or $2.40 per share versus $235.5 million or $2.15 in the fourth quarter of last year. GameStop was adversely impacted by foreign currency exchange by $13.9 million or $0.09 per diluted share.
Total worldwide sales for the company in the fourth quarter were $3.53 billion compared to $3.48 billion in 2014’s fourth quarter, an increase of +1.4 percent. Consolidated comparable store sales grew +3.1 percent, 3.0 percent domestically and 3.3 percent internationally, after the company reported a decline of -1.1 percent in the third quarter.
Declining software sales were offset by sales in new video game hardware, accessories, digital, mobile and consumer electronics and other revenue, such as collectibles. The analyst consensus was for earnings per share of $2.25 on revenue of $3.56 million.
Paul Raines, GameStop President and Chief Executive Officer said in the company’s conference call after the earnings release,“We are pleased that we have managed the transition of ramping up Digital and Collectibles inside our GameStop branded stores, while allowing for declines in physical software. In 2015, nearly 25% of operating earnings came from non-physical gaming sources like Digital, Collectibles and Technology brands.”
Raines continued, “Let me say that again, in 2015, nearly 25% of operating earnings came from non-physical gaming sources like Digital, Collectibles and Technology brands. This planned mix shift allows us to show the impressive results we have on profit contribution for this year and into the future. And, our goal is to increase the contribution from Digital, Collectibles, and Technology brands to 50% by the end of 2019.”
GameStop anticipates 2016 sales to be flat to a positive +3 percent with comparable store sales to be between a negative -3 percent and 0 percent. For the company’s first quarter GameStop is expecting sales growth to be in the range of a negative -7 percent to a negative -4 percent with comps declining between -7 and -9 percent. Earnings are expected to be between $3.90 to $4.05 for the full 2016 year and $0.58 to $0.60 for the company’s first quarter. Analysts expected guidance of $0.70 for the first quarter and $4.08 for the full year.
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