GameStop Results Miss Estimates; Outlook Weak

(RTTNews) - Video-game retailer GameStop Corp. (GME) said Thursday after the markets closed that its fourth quarter profit rose 11% from last year, as better cost control helped offset a 5.6% decrease in sales.

However, the company's quarterly earnings per share, excluding item, came in below analysts' expectations as did its quarterly sales. At the same time, the company gave disappointing outlook for the current quarter and fiscal year.

Paul Raines, GameStop's chief executive officer, said, "2014 was a year of continued growth, diversification and expansion of the GameStop family of specialty retail brands. In our core video game business, we achieved our highest market share in history with 28% share of next-generation hardware, 46% share of next-generation software and an estimated 42% share of downloadable content."

GameStop shares are currently losing 4.49% in after hours trading after closing the day's regular trading session at $38.79, down $1.02 or 2.56%. The shares trade in a 52-week range of $31.69 to $46.59.

For the fourth quarter ended January 31, 2015, the Grapevine, Texas-based company reported net income of $244.1 million or $2.23 per share, compared to $220.5 million or $1.89 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $235.5 million or $2.15 per share, compared to $222.4 million or $1.90 per share in the prior year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to earn $2.17 per share for the fourth quarter. Analysts' estimates typically exclude special items.

The company noted that foreign currency exchange rate changes negatively impacted fourth quarter earnings by $5.8 million or $0.05 per share.

Total sales for the fourth quarter fell 5.6% to $3.48 billion from $3.68 billion in the same quarter last year, as mobile and consumer electronics and new software growth was offset by a decrease in new hardware sales. Nineteen analysts had a consensus revenue estimate of $3.60 billion for the fourth quarter.

Same-store sales for the quarter declined 1.8%, including a 1.4% decline in the U.S. and a 2.6% decline internationally, due mainly to overlapping the launch of Sony's PlayStation 4 and Microsoft's Xbox One in November 2013.

Looking forward to the first quarter, the company expects total sales to be down 2% to up 1% and earnings to be $0.53 to $0.60 per share. Analysts currently expect the company to earn $0.66 per share on revenue growth of 6.60% for the first quarter.

For the fiscal year 2015, the company expects total sales to be down 1% to up 4% and earnings to be $3.60 to $3.80 per share. Analysts currently expect the company to earn $4.04 per share on revenue growth of $6.20% for the fiscal year 2015.