GameStop Cuts Q4, Full Year Comp Outlook After 16.4% Drop In Holiday Sales

GameStop Corp. GME slashed its comparable sales guidance for the fourth quarter and full year after it reported “disappointing” holiday sales on industry weakness, pricing pressure and lower store traffic.

GameStop now expects comparable store sales for the fourth quarter to be in a range of -18.0 percent to -16.0 percent and -12.0 percent to -10.0 percent for the fiscal year. In November, the company guided comparable store sales for the fourth quarter to range from -12.0 percent to -7.0 percent and full year comps of -9.5 percent to -6.5 percent.

However, GameStop maintained its EPS outlook for fourth quarter and full-year of $2.23 to $2.38 and $3.65 to $3.80, respectively.

For the nine-week holiday period ending December 31, 2016, total global sales fell 16.4 percent to $2.50 billion, and comparable store sales dropped 18.7 percent. GameStop noted that its comp trends improved from November to December (-26.6 percent in Nov. and -13.0 percent in Dec.) and are expects to improve in January.

New hardware sales decreased 30.3 percent as strong sales of Nintendo NES Classic were offset by a greater-than-expected decline in PlayStation 4 and Xbox One sales. Sales of new video game software also declined 22.8 percent due to difficult comparisons to titles launched a year ago.

Citing NPD data, Gamestop said it lost market share in November and to a lesser degree in December.

“We are disappointed with our overall results, but looking broadly, we did see continued growth in our non-physical gaming businesses and we expect this category to approach 40% of our earnings in fiscal 2016,” Paul Raines, chief executive officer, said in a press release.

Non-GAAP digital receipts fell 9.2 percent to $295.5 million, on lower new console software sales.

Shares of GameStop closed Thursday at $24.72. In Friday's pre-market hours, they sank 7.56 percent to $22.85.