Videogame retailer GameStop Corp. (GME) on Thursday reported a 25 percent decline in profit for the first quarter on lower revenue as well as comparable store sales. However, both revenue and earnings per share beat analysts' estimates, helped by strong sales of mobile devices and digital content in addition to higher margins.
Looking ahead, the company forecast earnings for the second quarter below analysts' estimates, but raised the lower end of its fiscal 2013 earnings guidance range.
Paul Raines, chief executive officer of GameStop said, "GameStop's continuing margin expansion, growing new businesses and market share gains are the results of executing our strategic plan. We look forward to capitalizing on the upcoming new console cycle."
Grapevine, Texas-based GameStop's sales of new video game hardware in the first quarter dropped 31 percent from the year-ago period to $241.8 million, while new video game software sales declined 4 percent to $703.2 million.
Sales of pre-owned video game products decreased 7 percent to $572.6 million, while other sales grew 15 percent to $347.7 million. Mobile sales in the quarter grew 290 percent to $46.8 million and digital receipts grew 47.3 percent.
The company's gross margin increased 100 basis points from the prior-year period to 31 percent.
GameStop's first-quarter net income was $54.6 million or $0.46 per share, down from $72.5 million or $0.54 per share in the year-ago period. On average, eighteen analysts polled by Thomson Reuters expected the company to report earnings of $0.40 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 7 percent to $1.87 billion from $2.00 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $1.84 billion.
Consolidated comparable store sales decreased 6.7 percent compared to the prior-year quarter. GameStop noted that topline sales continue to be impacted by the late stage effects of the current console cycle.
GameStop's board declared a quarterly cash dividend of $0.275 per common share, payable on June 19 to shareholders of record at the close of business on June 4.
Looking ahead to the second quarter, GameStop forecasts earnings in a range of $0.01 to $0.07 per share and comparable store sales in a range of -16 percent to -12.5 percent. Analysts expect the company to report earnings of $0.08 per share for the quarter.
For fiscal 2013, GameStop now forecasts earnings in a range of $2.90 to $3.15 per share, compared to the prior range of $2.75 to $3.15. Analysts expect the company to earn $3.11 per share for the year.
In addition, the company narrowed its outlook for full-year comparable store sales to a range of -5.0 percent to +1.5 percent, from the prior range of -6.0 percent to +1.5 percent.
In Thursday's regular session, GME is trading at $36.63, up $0.38 or 1.05 percent on a volume of 519,140 shares.
For comments and feedback: editorial@rttnews.com