GameStop shares sank on Wall Street on Tuesday after the Grapevine-based cideo game retailer narrowed its earnings guidance and reported holiday sales results.
GameStop said sales during the nine-week holiday season increased by 1.8 percent to $2.99 billion, and same-store sales increased by 4.4 percent. But the specialty retailer now sees earnings per share of $2.19 to $2.25 in the fourth quarter ending Jan. 31, versus a previous range of $2.12 to $2.32. Analysts anticipated $2.26, the average of predictions compiled by Bloomberg.
The company said sales of new software declined by 9.7 percent, despite 38 percent growth in new Playstation 4 and Xbox One games. Pre-owned sales declined by 0.3 percent.
Shares (ticker: GME) were down dropped $1.61, or nearly 6 percent, to $27.77 in early afternoon trading.
In a note to clients, Benchmark analyst Mike Hickey said the results showed “meaningful under-performance” compared to estimates from new game software, digital and mobile and consumer electronics. He called the 10 percent decline in new software sales “alarming,” and rasied concerns that digital game downloads are becoming increasingly disruptive.
But GameStop CEO Paul Raines said executives were pleased with the results, pointing to strong sales gain in collectibles and the company’s Technology Brands stores that sell wireless products and Aple accessories.