GameStop reports downside prelim Q3 results and lowers 2016 EPS/comps guidance to below consensus :
- Based on sales trends of recently released new video games as well as the current sell-thru rate of new video game hardware, co sees Q3 (Oct), EPS of $0.45-0.49, down from prior guidance of $0.53-0.58, vs. $0.57 Capital IQ Consensus Estimate; sees Q3 (Oct) revs of ~$2.0 bln vs. $2.09 bln Capital IQ Consensus Estimate, comparable store sales of -7.0% to -6.0% (prior guidance -2.0% to 1.0%).
- In light of the weaker than expected results through the third quarter, co lowers guidance for FY17 (Jan) EPS to $3.65-3.80, prior $3.90-4.05, vs. $4.01 Capital IQ Consensus Estimate and comparable store sales to range from -9.5% to -6.5% (prior guidance -4.5% to -1.5%)
- "Our expectation was that the new titles released in October would provide a catalyst for new software sales, but despite gaining market share, the titles underperformed our forecasted sales. While the Technology Brands and Collectibles segments continue to grow rapidly, they will not offset the decline in gaming this quarter. We remain excited about the innovation coming into the video game category over the next twelve months, including virtual reality, the Sony [SNE] PlayStation 4 Pro, the Nintendo Switch and Microsoft's [MSFT] Scorpio. We also remain confident that our diversification strategy will provide long-term growth and shareholder value."
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