GameStop shares fall as Grapevine-based company reports lower revenue

Declining demand for video game systems during the holiday shopping season, a year after new models were released, pushed down fourth-quarter revenue by 5.6 percent at GameStop, the Grapevine-based electronics retailer said Thursday.

Including one-time charges, some tied to closing an operation in Spain, the company reported net income of $244.1 million, or $2.33 a share, for the three months ended Jan. 31, compared with $220.5 million, or $1.89 a share, a year earlier.

Revenue in the quarter totaled $3.47 billion, down from $3.68 billion, and same-store sales fell 1.8 percent, the company said.

The results, released after the markets had closed, missed Wall Street estimates and drove GameStop shares down in after-hours trading. The stock (ticker: GME) was off $1.97, or 5 percent, to $36.82 in late afternoon trading, after losing 2.5 percent in the regular session to $38.79.

The company said sales of mobile and consumer electronics and new video game software increased, but was offset by the decrease in new hardware sales. In the quarter, sales of video game hardware totaled $808.8 million, or 23.3 percent of total sales, compared with $1.15 billion, or 31.5 percent, of total sales a year ago.

Sales of mobile and consumer electronics totaled 5.1 percent of total sales and exceeded expectations, said Paul Raines, GameStop’s CEO, in a statement.

“2014 was a year of continued growth, diversification and expansion of the GameStop family of specialty retail brands,” he said. “Meanwhile, our technology brands segment exceeded expectations, contributing 5 percent to our operating income and to our highest-ever annual gross margin of 29.9 percent as we rapidly expanded the footprint of our AT&T Wireless and Apple retail businesses.”

GameStop is expanding its Spring Mobile unit, having recently won the right to take over about 160 store locations from bankrupt RadioShack. In fiscal 2014, the company’s mobile and consumer electronics category grew by 70.8 percent, let by its Spring Mobile expansion.

“For 2015, we are focused on maintaining and growing market share in physical and digital gaming and, based on their superior returns, expanding our portfolio of technology brands by 350 to 550 stores,” Raines said.

This story was originally published March 26, 2015 at 4:43 PM with the headline "GameStop shares fall as Grapevine-based company reports lower revenue."