GameStop (GME) Shows Q3 Profit Growth, Beats the Street (Update)
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(Update with comments from analysts )
GameStop (NYSE: GME) posted 12 percent growth in third-quarter profit and sees strong sales for the holiday season on the back of mega-hit “Call of Duty: Modern Warfare 2.”
The new game from Activision Blizzard (Nasdaq: ATVI) was the biggest launch in the history of GameStop as the company has sold 2.5 million copies of the first-person shooter in the first week of its release. The company is optimistic that huge success of this game will be a bellwether for the expectations of its holiday sales.
Third-quarter earnings for the company were reported at 32 cents per share, 2 cents better than the analyst estimate of 30 cents per share. Revenue for GameStop in the quarter was $1.83 billion, ahead of the market consensus of $1.73 billion.
Same-store sales for the company were down by 7.8 percent. The video game retailer sees comparable sales up 7 percent in the fourth-quarter on the strength of a solid lineup of new game titles.
"The holiday season has started strong. In the first 72 hours of its (Call of Duty) release,” Daniel DeMatteo, GameStop Chief Executive Officer, stated. “Our stores are prepared to deliver this holiday with the broadest selection of new and used games, the most knowledgeable gaming associates and the buy-sell-trade model, which offers affordable choices that meet the needs of all types of gaming customers."
The company is holding firm its fourth-quarter earnings guidance range of $1.47 to $1.65, compared to the analyst estimate of $1.57. Full year guidance for the company is at $2.45 to $2.63 per share, versus the consensus of $2.53.
Shares are slightly up by 0.31 percent to $24.17 in current market movement.
Analyst Comments:
Goldman Sachs maintains a Neutral rating on GameStop citing the positives in new store productivity as being a factor helping to offset the declining same store sales. The analysts for Goldman Sachs believe that there will be a modest reaction to the stock in the short term while the company reaffirmed its guidance for the fourth quarter.
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