Video game and entertainment software retailer GameStop Corp. (GME) on Tuesday reiterated its earnings and comparable store sales outlook for the third quarter and fiscal 2009. GameStop is scheduled to report financial results for the third quarter on November 19, and would update its forecast for the fourth quarter.
GameStop, which operates 6,333 retail stores in 17 countries worldwide, is the world's largest video game retailer and sells its products through its GameStop, EB Games and Electronics Boutique trade name stores, and websites, including GameStop.com and EBgames.com, as well as 'Game Informer' video game magazine. The company is also seen pricing its video games at a consistent price of $59.99 per title.
The Grapevine, Texas-based Fortune 500 and S&P 500 company reaffirmed its earnings forecast for the third quarter in a range of $0.27 to $0.33 per share, excluding debt retirement costs of $0.01 per share. The company also maintained its forecast for comparable store sales for the third quarter to decline in a range of 6% to 11%.
On average, fifteen analysts polled by Thomson Reuters expect the company to report earnings of $0.30 per share for the third quarter. Analysts' estimates typically exclude special items.
The company noted that it would release financial results for the third quarter next week, and also update its outlook for the fourth quarter. While reporting second quarter results back in August, the company had issued guidance for the third and fourth quarters, and lowered its fiscal 2009 earnings outlook.
For the fourth quarter, the company anticipated earnings in a range of $1.47 to $1.65 per share, higher than $1.39 posted in the prior-year fourth quarter. Comparable store sales were projected to decline between 1.0% and 7.0%. Analysts are now looking for earnings of $1.57 per share for the fourth quarter.
Further, the company expected earnings for the full year 2009 to range between $2.40 and $2.64 per share, with a comparable store sales decline of 4.0% to 8.0%. Sixteen Wall Street analysts currently have a consensus earnings estimate of $2.52 per share for the full year 2009.
For the second quarter, GameStop posted a 32% drop in profit, hurt by lower new console unit sales and a lack of strong new software titles. Net income dropped to $38.7 million or $0.23 per share from $57.2 million or $0.34 per share last year. Quarterly sales declined 3.7% to $1.74 billion from last year's sales of $1.80 billion. Despite gaining over 200 basis points in new video game market share during the quarter, comparable store sales fell 14.1%.
Chief executive officer, Daniel DeMatteo then stated, "Due to the effects of the recession and strong prior year comparisons, the video game industry experienced a sharp decline in consumer spending during the quarter. Looking ahead, as the new title release schedule improves, we expect positive earnings growth in the back half of the year."
Late last month, GameStop announced plans to hire about 15,000 seasonal part-time game advisers between now and December 24, 2009, in order to manage the upcoming holiday rush. The company noted that the launches of several highly anticipated blockbuster video games combined with the recent price reductions for the PlayStation 3, Xbox 360 and Wii gaming consoles are expected to create a lot of store traffic.
The company noted that this hiring will increase its total headcount by about 46% and the in-store game adviser headcount by about 78%. These numbers are consistent with GameStop's seasonal hiring efforts in 2008 and 2007, the company added.
In Tuesday's regular trading session, GME is currently trading at $25.79, up $0.29 or 1.14% on a volume of 0.41 million shares. In the past 52-week period, the stock has been trading in a broad range of $16.91 to $32.82.
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