Slow new software sales play down GameStop comps

GRAPEVINE, Texas — GameStop reported that total sales for the third quarter of 2011 were $1.95 billion, an increase of 2.5% compared with $1.9 billion in the prior year quarter. Total company comparable-store sales were down 0.6%, primarily impacted by lower-than-expected sales of new software. GameStop’s digital sales showed continued strength, increasing 59%, with console digital growing 63% and PC digital growing 51%. Pre-owned sales increased 3.1%.

The company reported that new video game software grew 4.8%. The top five-selling games during the quarter were "Gears of War 3" by Microsoft, "Battlefield 3" and "Madden NFL 12" by Electronic Arts, "Batman: Arkham City" by Warner Home Video Games and Deep Silver’s "Dead Island."

GameStop reported that net earnings for the third quarter were $53.9 million compared to $54.7 million in the prior year quarter. Diluted earnings per share were in line with guidance at 39 cents compared with 36 cents, in the prior year quarter.

Paul Raines, CEO, stated, “In the third quarter, GameStop outperformed the market and continued to execute against the long-term strategic plan through additional investments in digital and emerging businesses. We expect that our innovative digital, iDevice and gaming tablet businesses will supplement our leading retail business this holiday.

For the fourth quarter of fiscal 2011, the company said it expects comparable-store sales to range from flat to 2%. Diluted earnings per share are expected to range from $1.66 to $1.76.

GameStop is reiterating its full year diluted earnings per share guidance range of $2.82 to $2.92, representing a 6.4% to 10.2% increase over fiscal 2010. Full year comparable-store sales are now expected to range from down 1% to flat based on revised annual revenue growth of 2% to 3%.