GameStop Reaffirms Guidance; Stock Up 11%

(RTTNews) - Video-game retailer GameStop Corp (GME) on Tuesday reaffirmed its guidance for the fourth quarter and full year.

The company still expects fourth-quarter earnings of $2.08 to $2.24 per share. Analysts polled by Thomson Reuters expect earnings of $2.16 per share for the quarter. Analysts' estimates typically exclude special items.

For the full year, GameStop continues to expect earnings of $3.40 to $3.55 per share, while analysts expect $3.49 per share.

GameStop also provided its performance for the nine-week holiday period ended January 3, 2015, reporting global sales of $2.94 billion, a 6.7% decline from a year ago.

Due to the current strength of the U.S. dollar, the company's sales were negatively impacted by foreign currency exchange rates as described in this release, GameStop said.

Total comparable store sales decreased 3.1%, comprised of -3.3% in the U.S. and -2.7% internationally. By month, November's comparable store sales declined 12% as the company overlapped last November's PS4 and Xbox One console launches, while December's comparable store sales increased 4.4%.

Paul Raines, chief executive officer, stated, "During the holiday period, consumer demand for video games was strong, resulting in new software sales growth. We expect that trend to continue into the first quarter. Overall, each of our business units performed well giving us positive momentum as we look toward 2015."

New software sales grew 5.8%. The growth was driven by a 94.4% increase in PS4 and Xbox One software, led by titles such as Activision's Call of Duty: Advanced Warfare, Rockstar's Grand Theft Auto V and Ubisoft's Far Cry 4.

Sales of new hardware declined 32%, primarily attributable to overlapping last year's new console launches and lower unit price points this year. Demand for next generation hardware continues to be strong demonstrated by the 31.3% increase in units sold in December 2014 compared to December 2013.

Sales in the mobile & consumer electronics category increased 28%, driven by a 75.8% rise in Technology Brands revenues.

During the holiday period, GameStop repurchased 1.23 million shares of common stock at an average price of $38.62, or $47.5 million worth of stock. As of the end of the holiday period, the company had about $461.5 million remaining of its current share repurchase authorization.