GameStop (GME) Holiday Comps Increase 1.5%, Reiterates FY EPS Guidance

GameStop Corp. (NYSE: GME) today reported sales results for the nine-week holiday period ended January 5, 2019.

Total global sales for the holiday period were $2.63 billion, a 5.0% decrease compared to the 2017 nine-week holiday period ended December 30, 2017. Total comparable store sales increased 1.5%, including a 3.6% increase in the U.S. partially offset by a 3.1% decrease internationally. Comparable store sales are calculated comparing the nine weeks ended January 5, 2019 to the nine weeks ended January 6, 2018 in order to ensure the appropriate weeks around the holiday are compared. The primary contributor to the difference between the increase in comparable store sales and the decrease in total company sales is the shift in the company’s fiscal calendar for the 53rd week in fiscal 2017 and the timing of the Call of Duty launch.

Rob Lloyd, chief operating officer and chief financial officer, said, “As we anticipated coming into the holiday season, we were able to leverage our position as a leader in the video game industry to drive positive comps on top of what was a strong holiday period in 2017. Our comp performance was driven by strong sales in accessories, collectibles and digital which more than offset the decline in pre-owned sales and new video game hardware sales.”

Category Performance

• New hardware sales decreased 6.1%, as a result of the successful Xbox One X launch in the 2017 holiday period, partially offset by strong growth in Nintendo Switch sales.
• Sales of new video game software decreased 8.3%, driven primarily by the difference in launch timing of Activision’s Call of Duty: Black Ops 4 which released in October 2018, compared to Call of Duty: WWII which released in November 2017.
• Pre-owned sales declined 16.4% reflecting declines in software and hardware.
• Video game accessories sales grew 28.7% on the continued strength of controller and headset sales.
• Collectibles sales increased 3.7% to $219.2 million. The sales growth was constrained by significantly lower promotional activity in fiscal 2018 in an effort to better manage gross margin rate.
• Digital receipts increased 16.8% to $352.9 million driven primarily by strength in sales of digital currency.
• Technology Brands sales, which are not included in comparable store sales, decreased 19.3%, driven by a decrease in store count and store traffic.

Guidance UpdateGameStop is reiterating its previously announced annual guidance for fiscal year 2018 adjusted earnings per share of $2.55 to $2.75. This includes the results of the Spring Mobile business, which will be classified as discontinued operations for fiscal 2018. Comparable store sales are expected to be approximately flat for the fiscal year.

The Company anticipates reporting fourth quarter and full fiscal year 2018 results in late March and will provide fiscal 2019 guidance at that time. The company anticipates that its Spring Mobile business will generate approximately $75 million - $85 million of adjusted operating earnings in fiscal 2018. The sale of that business was completed on January 16, 2019.

You May Also Be Interested In

• Toll Brothers (TOL) Tops Q3 EPS by 5c, reaffirms guidance
• Jack Henry (JKHY) Tops Q4 EPS by 13c
• Iridex Corp (IRIX) Misses Q2 EPS by 5c