Thursday November 19, 04:38 PM
REFILE-UPDATE 2-Gamestop third-qtr profit beats estimates
By Franklin Paul
NEW YORK, Nov 19 (Reuters) - GameStop Corp (NYSE: GME - news) 's
quarterly profit beat expectations helped by price cuts that
stoked video game console demand and as used-game sales boosted
margins -- signs a months-long period of gloom may be easing.
Shares of the biggest U.S. video game retailer were
unchanged at $24.09 on Thursday morning as the broader market
declined. Shares initially rose 2.3 percent after GameStop
reaffirmed its fourth-quarter profit forecast and said sales in
the holiday shopping season were off to a strong start.
The optimism is in contrast to months of dour industry
sales reports as the sluggish economy discourages consumers
from buying $60 games and consoles costing $200 or more.
Even research firm NPD's October report showed weak
software sales following price cuts on Sony Corp's
PlayStation 3 console, Nintendo Co Ltd (Berlin: NTO.BE - news) 's Wii and
Microsoft Corp (NASDAQ: MSFT - news) 's Xbox 360.
But GameStop Chief Operating Officer Paul Raines blamed the
sluggish market on a dearth of top games. Consumers are
returning to the stores for titles like new versions of
Microsoft's 'Halo' and Electronic Arts (NASDAQ: ERTS - news) ' 'Madden NFL,'
as well as Square Enix's 'Batman: Arkham Asylum' and
Take-Two Interactive's 'NBA 2K10.'
'In this category, it's less about the economy and more
about the title catalog, and that started to happen for us in
this quarter,' Raines said in an interview. 'We saw gamers
coming back to us.'
GameStop, which had backed its view of third-quarter
results last week, posted a profit of $52.2 million, or 31
cents a share, for the third quarter ended Oct. 31, compared
with $46.7 million or 28 cents a share in the prior year
quarter.
Excluding special items, the profit was 32 cents a share,
beating analysts' expectations of 30 cents a share, according
to Thomson Reuters I/B/E/S.
GameStop sales rose 8.2 percent to $1.83 billion from $1.7
billion in the prior-year's quarter. On average, analysts had
expected sales of $1.73 billion. Same-store sales fell 7.8
percent in the third quarter.
The company said its store foot traffic increased from the
second quarter, as did gross margins, led by a sequential
improvement in its used business. GameStop's margins benefit
from its trade-in system which lets shoppers return used games
for a fraction of the purchase price in cash or credit toward
future sales. Returned games sell at a higher profit margin --
around 50 percent -- than new games.
GameStop forecast fourth-quarter earnings per share of
$1.47 to $1.65, and a decline in comparable-store sales in a
range of 1 percent to 7 percent.
(Reporting by Franklin Paul, editing by Gerald E. McCormick)
Keywords: GAMESTOP/
(To read more about our Media news, visit out MediaFile blog online at http://blogs.reuters.com/mediafile)
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