On Thursday, GameStop Corp. (NYSE:GME) reported its earnings for its fiscal first quarter that ended April 30 (February 1-April 30). According to the Thomson Reuters consensus, their estimates are $0.61 in earnings per share on $1.97 billion in revenue. Last year, GameStop posted an earnings per share of $0.68 and $2.06 billion in revenue.
The video game retailer’s current-quarter profit fell below analysts’ estimates. GameStop total sales dropped to 4.3 percent to 1.97 billion with comparable store sales falling 6.6 percent in the US and 4.9 percent internationally. This has sent its shares down 10 percent. According to GameStop this happened due to a 28.8 percent decline in new hardware sales and that fact that last year’s first quarter saw the release of major games including Grand Theft Auto V for PC, Mortal Kombat X, and Battlefield Hardline.
For their new video game hardware business its sales fell 28.8 percent to $312.9 million in the first quarter ended April 30. On the plus side GameStop's technology brands business, which include the stores Spring Mobile, Cricket Wireless, and Simply Mac, rose 62.2 percent to $165.8 million in revenue. They also received operating earnings of $18.8 million which is up a 506.5 percent. GameStop’s net income fell to $65.8 million, or 63 cents per share, from $73.8 million which is 68 cents per share from last year. This quarter’s earnings were also affected by GameStop closing all of its stores in Puerto Rico.
Tom Clancy’s The Division’s new downloadable content (DLC) helped raise digital sales to 16.6 percent to $259 million. Also GameStop’s Mobile and Consumer Electronics category saw sales jump 40.8 percent. During this quarter the company also added 18 new technology brand stores. Their technology brands segment contributed16.5 percent of the company's first-quarter operating earnings. Their “Collectibles” division also had good sales. The earnings include physical sales at stores and sales from ThinkGeek.com. Sales in their “collectibles” division rose 250 percent to $82.3 million, thanks in part to the sales of toys based on Five Nights at Freddy's, Pokemon cards, and Minecraft. In 2015, ThinkGeek was acquired by GameStop for $140 million.
GameStop earned 66 cents per share, which beat financial analysts’ estimate of 62 cents. The company's shares were down 7.9 percent at $27.60 when the market closed.