GameStop tanks after 4Q outlook falls short

AP News
Posted: Jan 14, 2014 10:46 AM

NEW YORK (AP) — Shares of GameStop plunged almost 19 percent after a profit outlook from the world's largest video game retailer came in well below Wall Street expectations for the crucial holiday period, though sales were strong.

GameStop is forecasting fourth-quarter earnings of $1.85 to $1.95 per share for the fourth quarter, which ends this month. That's down from its earlier outlook of $1.97 to $2.14 per share.

The company expects full-year earnings of $2.96 to $3.06 per share.

Analysts had been looking for fourth-quarter earnings of $2.14 per share, according to a poll by FactSet. For the full year, analysts had projected $3.25 per share.

GameStop said that its sales at stores open at least a year increased 10.2 percent for the nine-week holiday season. That was much higher than the 4.4 percent increase that Wall Street had expected, according to Stifel analyst David Schick.

Sales at stores open at least a year is a key indicator of a retailer's health because it excludes the volatility typical of stores recently opened or closed.

Shares of GameStop Corp., based in Grapevine, Texas, fell $8.37, or 18.5 percent, to $36.95 in morning trading. The stock has traded in the 52-week range of $22.57 and $57.74.