Video game retailer GameStop Corp. (GME) on Thursday reported a 10 percent decline in profit for the first quarter from last year on slower than expected store traffic and as demand softened for "AAA" game launches. However, earnings per share matched analysts' estimates.
Looking ahead, GameStop forecasts earnings for the second quarter to be lower than analysts' expectations, but maintained its earnings outlook for fiscal 2012. The company's shares are down more than 7 percent in the regular session.
Paul Raines, chief executive officer of GameStop, said, "Despite slower store traffic during the quarter, we achieved our earnings target due primarily to gross margin expansion and positive profit contributions from our pre-owned, mobile and digital businesses. We expect those segments to fill the profitability gap as we transition to the new console cycle."
Sales in the company's pre-owned and Other categories were down slightly in the quarter, while sales in new video game hardware and software declined more than the company expected.
Digital receipts, which are included in the Other category, grew 23 percent from last year. Mobile sales, also included in the Other category, were $12 million in the quarter and are on plan to reach the company's goal for mobile sales of $150 to $200 million in 2012.
GameStop's net earnings for the first quarter declined to $72.5 million or $0.54 per share from $80.4 million or $0.56 per share in the year-ago period.
On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
Total sales for the quarter declined 12 percent to $2.00 billion from $2.28 billion in the year-ago period and missed analysts' consensus estimate of $2.05 billion.
Consolidated comparable store sales dropped 12.5 percent, compared to the prior-year quarter.
However, gross margin rose to 30 percent from 27.2 percent in the same period last year.
Looking ahead to the second quarter, GameStop expects earnings per share in a range of $0.10 to $0.18 and comparable store sales in a range of -11 percent to -5 percent. Analysts expect the company to earn $0.26 per share for the quarter.
For fiscal year 2012, GameStop maintained its outlook for earnings per share in a range of $3.10 to $3.30 and projects comparable store sales to range from -5 percent to flat. Analysts expect the company to report earnings of $3.20 per share for the year.
GameStop's board of directors declared a quarterly cash dividend of $0.15 per common share, payable on June 12, 2012 to shareholders of record at the close of business on May 29.
In Thursday's regular session, GME is trading at $19.31, down $1.53 or 7.37 percent on a volume of 394,740 shares.
For comments and feedback contact: editorial@rttnews.com
Business News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.