Shares of GameStop Corp. (GME) surged 6.5% in yesterday’s extended trading session after the company reported 4.4% growth in comps for December following a 12% dip in November. Subsequently, the company skewed its comps guidance for fourth quarter and fiscal 2014.
Comps are now expected to decline in the range of 1%-2.5% as against the earlier range of negative 5% to positive 2% for the quarter. For the fiscal, comps are expected to fall in the range of 3%-4% as against 2%-5% decline projected earlier.
However, GameStop’s sales for the holiday period i.e., nine weeks ended Jan 3, 2015, were down 6.7% marred by a stronger U.S. dollar. Even on a constant currency basis, sales were down 4%. Moreover, comps for the nine weeks were down 3.1%. Comps declined 3.3% and 2.7%, in the domestic and international markets, respectively.
On the other hand, new software sales, during the holiday period, grew 5.8% (up 8.9% on constant currency basis). Higher software sales were driven by a 94.4% rise in demand for next generation titles like Activision’s Call of Duty: Advanced Warfare, Rockstar’s Grand Theft Auto V and Ubisoft’s Far Cry 4 for both Microsoft Corp.'s (MSFT) Xbox One and Sony Corp.’s (SNE) PS4.
Unlike software, new hardware sales disappointed as it tanked 32% (down 29.8% on constant currency) for the nine-week period due to reduced unit price points and overlapping of new console launches in 2013. Sales in pre-owned/value category also fell 1.3% (up 1% on constant currency basis).
Sales in mobile & consumer electronics category grew 28%, (28.6% in constant currency) led by 75.8% increase in Technology Brands revenue. Also, digital receipts of $296.6 million registered 42.8% increase (46.4% in constant currency) as console sales rose nearly 50% year over year. Over the holiday period, the company also bought back 1.23 million shares at a cost of $47.5 million.
Given the overall holiday performance, management reiterated its fourth quarter and fiscal 2014 guidance, outlined in November. Fall in sales of the prior-generation software on account of transition to next-generation consoles and shift in titles out of 2014 compelled this Zacks Rank #4 (Sell) stock to trim its guidance in November.
The company continues to expect fourth-quarter earnings in the range of $2.08 to $2.24 per share and full-year earnings in the range of $3.40 to $3.55 per share. The Zacks Consensus Estimate stands at $2.17 for the quarter and at $3.49 for the fiscal.
GameStop, which competes with Best Buy Co., Inc. (BBY), is scheduled to announce fourth-quarter results on Mar 26, 2015.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment