GameStop expects lower quarterly sales on store closures, France exit

Aug 31 (Reuters) - GameStop said ‌on Monday it ​expects ​second-quarter net sales to decline due to planned store closures and the sale of its France operations.

The videogame retailer expects ‌quarterly net sales in the range of $780 million to $800 million ⁠on a preliminary basis, compared with $972.2 million reported a year ago.

Still, GameStop's shares rallied ‌5% in premarket trading after ‌the company said it would pay about 27% of a previously announced $1.4 billion debt exchange through cash on hand instead of issuing new ​stock. That would prevent shareholders from suffering more dilution.

GameStop has been pursuing a high-profile takeover of the much larger eBay and has ⁠built a nearly 10% stake in the online auction site even after suffering a rejection in ​May. Bloomberg News reported earlier this month it could pull the bid and instead focus on a partnership or ​venture with the e-commerce company.

While the takeover ‌proposal attracted significant attention on Wall Street and among retail investors, it drew widespread skepticism from analysts, who ⁠questioned how GameStop would finance the acquisition and highlighted the limited overlap between the companies' core businesses.

GameStop said it expects cash, cash equivalents and marketable securities to ⁠be in the range of $5.05 billion to $5.07 billion, compared with $8.69 billion at the close ​of the prior year's second quarter.

It expects quarterly net income between $290 million and $310 million, versus $168.6 million reported a year earlier.

Net income for the quarter includes about $238 million ‌in net gains stemming from the eBay derivative asset and equity investment, partially offset by a loss of ‌roughly $75 million on digital assets and related receivables.

GameStop, which has shifted focus from ⁠traditional hardware sales toward trading ‌cards and collectibles, is ​scheduled to report its second-quarter results on September 8.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar and ‌Maju Samuel)

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