GameStop today revealed its holiday sales figures for the nine-week period ended on January 2. Overall sales came to $2.86 billion, which was flat compared to a year earlier, and comparable store sales for the period also decreased 8.6%. Hardware sales also declined 8% thanks to a combination of the price cuts earlier in the fall and people simply purchasing fewer units. Even with flat overall sales, GameStop's used games business still grew 10%, although that was less than forecast.
Sales of new software increased 4%, led by these top five: Call of Duty: Modern Warfare 2 from Activision, Ubisoft's Assassin's Creed II, Nintendo's New Super Mario Bros. Wii, EA's Left 4 Dead 2 and Dragon Age: Origins.
Daniel DeMatteo, Chief Executive Officer, stated, "Despite a kick start to this year's holiday selling season with several major title launches, sales momentum was impacted in December by economic weakness in all global operating segments, winter storms at peak shopping periods in December, and unexpected shortages of key products such as New Super Mario Bros. Wii, Nintendo Wii and Sony's PlayStation 3 consoles."
With the holiday results now in, GameStop has had to lower it guidance for the fourth quarter, and now expects Q4 earnings per share guidance to range from $1.25 to $1.29. Comparable store sales for the quarter are now expected to range from -8.5% to -9.5%. For the full year, the company said earnings per share are forecast to range from $2.23 to $2.27, while comparable store sales are projected to decrease between -8.0% and -9.0%. Total sales should grow between +2.0% and +3.0%.
"It is important to note that this is still the second highest earnings year in GameStop's history coming off a record fiscal year 2008. Our fiscal year 2009 projected EPS represents a 25% growth over fiscal year 2007," commented Cathy Smith, Chief Financial Officer.
Indeed, GameStop remains in fine shape and expects to have almost $700 million of cash on hand by year's end. The retailer said that "strong PlayStation 3 demand," along with an exciting games line-up and an "anticipated economic recovery," should drive software growth in 2010, leading to gains for GameStop.
