GameStop Corp. (NYSE:GME) Tuesday reported third-quarter earning that beat estimate and reiterated its full-time guidance, shares rose more than 7 percent. The world’s largest retailer of video games said net income fell to $50.8 million, or 49 cents per diluted share, in the third quarter, compared with $55.9 million, or 0.53 cents per diluted share, a year earlier. Analyst had projected adjusted earnings of 47 cents per share.
Revenue decreased 2.8 percent to $1.96 billion in the third quarter, missing analysts’ estimate by $30 million. The company is struggling in recent years as more and more customers prefer to download games from their consoles rather than buying physical copies. New hardware sales declined 20.6% and new software sales declined by 8.6%.
Comparable store sales, the key measure investors are looking at, declined 6.5 percent in the third quarter. The company expects comparable store sales between -12% to -7%, much worse than its pervious guidance of -9.5% to -6.5%.
For the fourth quarter, the company expected earnings to range from $2.23 to $2.38 per share. For the full-year guidance, the company reiterated adjusted earnings per share of $3.65 to $3.8 it provided on November 2.
"Our third quarter results were in line with the revised guidance we issued on November 2. While the video game business has underperformed recently, we are focused on maintaining our leading market position, especially during the holiday season, as well as driving diversification through the growth of Technology Brands, Digital and Collectibles. In aggregate, despite the softness in video games, I'm proud that our team was able to increase total operating earnings by nine percent year-over-year.” Chief executive officer Paul Raines said.
GameStop shares jumped 8.59 percent to $26.19 in New York.