Game Stop Conference Call Highlights

Game Stop

reported its third quarter earnings on Friday. Shares of the company are down a staggering thirteen percent. Below are some key highlights from its conference call: • Our consolidated sales were $2.09 billion, down 0.7% from the prior year quarter, with the comp decrease of 2.3%. • Consolidated net earnings for the third quarter, excluding divestiture costs related to Spain were $64.3 million, a decrease of 6.3% from last year. • Adjusted diluted earnings per share for the quarter were $0.57. • We estimate that the impact of the movement of Assassin's Creed had a comp impact of over 2%, and an EPS impact of at least $0.05, given the sales we had in the first five days after launch. • We are forecasting same-store sales for the fourth quarter ranging from negative 5% to plus 2% given that we are comping the launch of the next-gen consoles from last November. • We expect the full year comps to come in plus 2% to plus 4%. • We expect diluted earnings per share to range from $2.08 to $2.24 for the fourth quarter, an increase from $1.89 last year. • We are revising our previous full year 2014 earnings per share guidance of $3.40 to $3.70 to a new range of $3.40 to $3.55. • The decline in prior gen software sales due to the transition to next-gen consoles has been steeper than expected and titles that moved out of 2014 will both have an impact on our results this year. • International comps were plus 3.1% with a positive comp of 8.4% in Australia and New Zealand. • The U.S. comp was down 4.8%. • New hardware sales increased 147.4% based on the continued strength of the next-gen console adoption. • The adoption rate continues to grow on a monthly basis, as we measure sales compared to the same point in the last cycle. • We outperformed the U.S. market leading to a hardware share gain of 390 basis points. • The primary reason for the decline in new software sales of 34.4% was the comparison of this quarter's hit titles to those of the third quarter of last year. • We achieved over 47% software market share in the quarter. • Our second highest quarterly share ever behind only last year's third quarter. • Pre-owned sales increased 2.6% compared to the prior year quarter. • The U.S. was up 2.2% and international was up 5.2% or 9.8% excluding FX impact. • This marks the third consecutive quarter that pre-owned business has grown and we expect this trend to continue throughout 2015 as value-oriented consumers find great deals in Xbox 360s and PlayStation 3 and in pre-owned next-gen consoles and software. • Our digital receipts were $210 million, a 52% increase over the third quarter of last year with over 80% growth in international driven by console digital sales associated with Destiny and FIFA. • We ended the quarter with 6,664 stores, 4,183 U.S. videogame stores, 2,073 international videogame stores, and 408 Technology Brands stores, which include 311 AT&T branded stores operated by Spring Mobile, 51 Cricket stores and 46 Simply Mac stores. • We opened 5 videogame stores and closed 19 in the U.S. and opened 11 and closed 120 internationally, which includes the changes in Spain. • We added 55 Tech Brand stores through acquisitions and opened 34 more. • During the third quarter, we repurchased a $144 million of our stock with 3.6 million shares at an average price of $40.25. • Year-to-date, we've repurchased 6.8 million shares at an average of $39.90 for a total of $271.7 million. • Our guidance for the year was to buyback between $250 million and $300 million. • Life-to-date we repurchased 67.4 million shares at an average price of $24.36 for a total of $1.64 billion. • Multi-channel grew 20% during the quarter led by 91% growth in our pickup at store program where customers can hold their product online and conveniently pick it up at a local store. • Mobile transactions increased by 79% and 69% of our online traffic is now coming from a mobile phone or tablet. • We released a major upgrade to the GameStop mobile app and with over 6.1 million installs, this app makes it easier to research products, find local stores, track pre-orders and manage your PowerUp Rewards account and game library.