GameStop Earnings and Guidance Fail to Meet Expectations

GameStop Corp. (NYSE: GME) reported its third-quarter financial results before the markets opened on Monday. The company had $0.54 in earnings per share (EPS) on $2.02 billion in revenue versus consensus estimates from Thomson Reuters that call for $0.59 in EPS on $2.14 billion in revenue. The same period from the previous year had $0.57 in EPS on $2.09 billion in revenue.

Total global sales decreased 3.6%, a 1.2% increase in constant currency, and consolidated global comparable store sales declined 1.1%. Foreign exchange (FX) rate changes negatively impacted sales by roughly $100 million and EPS by $0.02.

During the third quarter, the company repurchased $44.9 million of common stock at an average price of $43.85 per share, leaving $295.4 million on the existing repurchase authorization.

In terms of guidance, GameStop expects comparable sales to range from -1.0% to +6.0% and EPS in the range of $2.12 to $2.32. There are consensus estimates that call for $2.37 in EPS on $3.67 billion in revenue.

Paul Raines, CEO of GameStop, commented on earnings:

Our third quarter results were at the low end of our guidance range due to lower than expected new software and hardware sales and delays in Technology Brands store openings; however, our expectations for the full year have not changed. Looking ahead to the fourth quarter, a solid slate of new video games, coupled with contributions from our diversified AT&T, Apple and ThinkGeek businesses and our in-store collectibles offerings are expected to drive our fourth quarter results; therefore, we are reiterating our full year earnings per share guidance range of $3.66 to $3.86.

On the books, cash and equivalents totaled $186.2 million at the end of the third quarter compared to $374.0 million at the same period from the previous year.

Shares of GameStop closed Friday up 2.1% at $39.26, with a consensus analyst price target of $50.90 and a 52-week trading range of $31.69 to $47.83. Following the release of the earnings report, shares were down over 18% at $32.00 in early trading indications on Monday.

ALSO READ: Top 6 Earnings Previews for the Coming Week