GameStop (GME) reported earnings on Thur 29 Nov 2018 (a/h)

** charts before earnings **

 

** charts after earnings **

GameStop beats by $0.03, beats on revs; lowers FY19 EPS below consensus; strategic review ongoing

• Reports Q3 (Oct) earnings of $0.59 per share, excluding non-recurring items, $0.03 better than the S&P Capital IQ Consensus of $0.56; revenues rose 4.8% year/year to $2.08 bln vs the $2.03 bln S&P Capital IQ Consensus. consolidated comparable store sales increase of 2.1% (3.4% increase in the U.S. and 0.5% decrease internationally). New hardware sales increased 12.8%, driven by demand for Xbox One X and Sony PS4. New software sales increased 10.9% driven by the strong slate of titles that launched during the quarter. Accessories sales increased 32.6% on the strength of headset and controller sales. Pre-owned sales declined 13.4%. Digital receipts increased 29.5% to $341.6 million driven primarily by strength in sales of digital currency. Collectibles sales increased 11.7% to $154.6 million due to continued growth in both our domestic and international collectibles business.
• Co issues downside guidance for FY19, lowers EPS to $2.55-2.75, excluding non-recurring items, from $3.00-3.35 vs. $3.06 S&P Capital IQ Consensus. REaffirms sales down 2-6% with comps down 0-5%.
• "While our Black Friday and Cyber Monday sales were strong, we anticipate that our fourth quarter sales will skew more towards hardware than initially planned which, along with underperformance of certain titles, weakness in pre-owned and recent sales promotions, will result in fourth quarter earnings that are below our previous expectations. Importantly, we are evaluating all aspects of our business, including our store and omni-channel experience, cost structure, strategic and economic partnerships with publishing and platform partners, and relationships with customers and the services we offer to them, to enhance our business and drive growth and profitability over the long term."
• The company also confirmed that it continues to engage with third parties regarding a possible transaction as part of the comprehensive review of strategic and financial alternatives currently being undertaken by the company's board of directors. The ongoing process includes a thorough evaluation of a full range of alternatives to enhance shareholder value.