We recently reported July video game sales to be down 29%, marking the fifth consecutive month of decline. It comes as no surprise that the weaker industry sales are affecting GameStop as well.
The retailer reported its second-quarter fiscal results today for the period ended August 1, and total sales came to $1.74 billion, a 3.7% decrease compared to sales of $1.80 billion in the prior year quarter. The top five selling games driving sales during the quarter were THQ’s UFC 2009 Undisputed, Activision’sPrototype, EA’s Fight Night Round 4 and NCAA Football 2010, and Atari’s Ghostbusters.
The company noted that "despite gaining over 200 basis points in new video game market share during the quarter, comparable store sales decreased 14.1% due to lower new console unit sales, a lack of strong new software titles compared to last year’s record releases and customer caution due to the continued weak economy."
Even so, the company's net earnings were $38.7 million, representing the second highest summer quarter in GameStop history despite being down 32.3% compared to net earnings of $57.2 million in the prior year period.
“Due to the effects of the recession and strong prior year comparisons, the video game industry experienced a sharp decline in consumer spending during the quarter,” said Daniel DeMatteo,GameStop CEO. “Looking ahead, as the new title release schedule improves, we expect positive earnings growth in the back half of the year.”
Thanks to "weak trends in consumer spending related to on-going economic uncertainties, and some key new title slippage such as Bioshock 2, StarCraft II and Splinter Cell: Conviction," GameStop also decided to change its outlook for the year. For the third quarter of fiscal 2009, GameStop is forecasting earnings per share to range from$0.27 to $0.33, as compared to $0.28 in the prior year period. Comparable store sales are projected to range from -11.0% to -6.0%.
For the fourth quarter of fiscal 2009, GameStop is forecasting earnings per share to range from $1.47 to $1.65, as compared to $1.39 in the prior year period. Comparable store sales are projected to range from -7.0% to -1.0%. And finally for the full year, GameStop has lowered overall earnings per share guidance from a range of $2.83 to $2.93 to a range of $2.40 to $2.64; this now represents annual growth of flat to +10%. Comparable store sales are expected to end the fiscal year down four to eight percent.
