GameStop Falls 19% on Loss Exceeding Most Pessimistic Estimate
GameStop Tumbles After Loss Exceeds Most Pessimistic Estimate
(Bloomberg) -- GameStop Corp., the ailing video-game retailer, plunged as much as 19% after posting a third-quarter loss that was larger than even the most dire Wall Street estimate.
The adjusted quarterly loss came to 49 cents a share, the merchant said Tuesday. The most pessimistic analyst had expected a deficit of 16 cents. Sales plummeted 26% from a year earlier to $1.44 billion, and GameStop also reduced its forecast for the year.
The shares tumbled to as low as $5.25 in their worst decline in three months. The stock had lost 48% this year as of Tuesday’s close.
The dismal results came at the start of the industry’s biggest season, with top-sellers including Call of Duty: Modern Warfare and Luigi’s Mansion 3 being released in the period.
Read more: Analyst Says Quarter Looks More Like a ‘Eulogy’
The chain has struggled to sustain its revenue as more video-game players gravitate to free online titles that generate money by selling fans online merchandise while they play. The Grapevine, Texas-based retailer, which once boasted annual sales of more than $9 billion, is forecast to finish the current fiscal year with revenue of $7.17 billion, based on analysts’ estimates.
Another headwind: The current generation of game consoles is aging, leaving consumers without a reason to upgrade.
Chief Executive Officer George Sherman blamed “the unprecedented decline in new hardware sales” for hurting sales last quarter, “as the current generation of gaming consoles reach the end of their life cycle.”
Mike Hickey, an analyst at Benchmark Co., described the latest results as “awful.”
The company’s “voyage seems doomed as the digital storm intensifies.”
To contact the reporters on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net;Olga Kharif in Portland at okharif@bloomberg.net;Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III, Molly Schuetz
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