GameStop Wins on First-Quarter Results, Loses on Guidance

GameStop Corporation

reported its first-quarter results Thursday, beating both EPS and revenue estimates. The Grapevine, Texas-based firm's EPS declined nearly 15 percent to $0.46, but comfortably topped the Wall Street consensus of $0.40. Revenue declined 6.5 percent year-over-year to $1.87 billion, but edged expectations of $1.84 billion.

New video game hardware sales tanked nearly 31 percent during the quarter. As a percentage of total sales, this segment now represents 13 percent versus 17.4 percent in Q1 2012. This is not surprising, as industry

as gamers hold out for the releases of PlayStation 4 and Xbox 720 in late 2013. New video game software also declined, albeit less severely. Sales dropped a modest 3.8 percent versus a U.S. industry decline of 14.2 percent. Meanwhile, pre-owned video game product sales fell 7.5 percent, perhaps reflecting the pending shift to new games for the mentioned consoles.

GameStop's mobile sales soared 290 percent during the first quarter. This is in line with an overall shift to mobile products occurring across various forms of technology, such as the continuing decline of the PC in favor of tablets and other mobile devices. The nation's 273rd-largest company's digital receipts also jumped during the quarter, rising 47.3 percent.

GameStop repurchased $25.5 million worth of stock during the quarter, representing approximately one million shares. According to the company, it remains committed to returning 100 percent of free cash flow to shareholders. The 17 year-old firm has $400 million remaining on its existing repurchase authorization.

GameStop's board of directors declared at quarterly cash dividend of $0.275 per share. It will be paid on June 19 to shareholders of record as of the close of business on June 4.

GameStop expects second-quarter earnings of $0.01 to $0.07 per share, which would fall short of the $0.08 analysts currently expect. For the year, the world's largest multichannel video game retailer raised the low end of its guidance from $2.75 to $2.90, with the high end remaining at $3.15. Still, at the middle-ground of $3.03, it would miss the $3.11 analysts want to see.

Despite topping first-quarter estimates, GameStop has fallen to a bit below $35 in the late morning hours of trading. The stock has dipped to a three-week low on word of the company's lackluster guidance. GameStop is down around four percent on Thursday.