GameStop Corp, the world’s largest retailer of video game products, warned of weak sales this year, as customers delay purchases ahead of the launch of next-generation gaming consoles. Comparable store sales are likely to fall by between 5.5 per cent and 8 per cent in the current quarter, the company warned.
Full-year sales are forecast to remain flat or fall by up to 8 per cent, implying a revenue of between $8.18-billion and $8.89-billion. Analysts expect $8.86-billion on average, according to Thomson Reuters I/B/E/S.
GameStop’s full-year earnings forecast also lagged analysts’ estimates by a sizeable margin. It sees full-year earnings at $2.75-$3.15 per share, while analysts had estimated $3.40 per share.
The video game industry is anticipating a strong finish to 2013 with the release of Grand Theft Auto V and the launch of at least one next-generation console by the holidays.
As a result, GameStop expects the first half of the year to be challenging as consumers postpone purchases leading up to the fourth quarter console launch.
Sony Corp said last month it would launch its next-generation PlayStation this year, its first video game console in seven years. Microsoft Corp is also expected to unveil the successor to its Xbox 360 later this summer.
Sales of traditional video game products such as consoles have been pressured globally by the rising popularity of online games as enthusiasts spend more time on tablets and phones.
U.S. sales of videogame hardware and software fell 25 per cent in February, following a month-over-month downward trend that has continued since last year, according to a report by market research firm NPD.
Games software sales were down 27 per cent during the same month, the report added.
GameStop has weathered the trend by focusing on selling new and used games to console owners and expanding its digital and mobile offerings, including the sale of iOS and Android devices in some stores.
The company said total revenue fell marginally in the fourth quarter to $3.56-billion.
Net income rose $261.1-million, or $2.15 per share, from $174.7-million, or $1.27 cents per share a year earlier.
Adjusted for the deferral of digital revenue and other items, the company’s earnings were $262.3-million, or $2.16 per share.
Analysts on average expected earnings of $2.09 per share on revenue of $3.45-billion for the fourth quarter.
In January, GameStop cut its same-store sales forecast for the fourth quarter after customer traffic shrank over the holiday season.
The company’s shares were trading up 2 per cent at $26.92 in early morning trade on the New York Stock Exchange on Thursday.
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