Stock tumbles after releasing the news
Last modified on Wednesday, 21 November 2007 11:42
GameStop, the largest video game retailer, forecast a disappointing profit outlook for this holiday season yesterday. While the company had strong third quarter results, it does expect to beat the sales numbers that it had for the fourth quarter last year, but it will fall short of the expectation of some analysts who were expecting higher numbers. Following the announcement, GameStop’s stock was down almost 10 percent.
GameStop did very well in the third quarter, primarily powered by such titles as Halo 3, Madden NFL 08, and Guitar Hero III, which all helped its net income rise to $52 million, or 31 cents a share, from $13.6 million, or 9 cents a share, a year ago. The numbers did beat Wall Street estimates of 23 cents per share for this quarter.
GameStop expects the holiday season to be difficult with all of the competition from retailers such as Best Buy and Wal-Mart applying maximum pressure. GameStop is the leading video game specialty retailer that has outlasted many of its rivals. GameStop continues to made headway in a difficult market space that continues to experience eroding profit margins, but the company continues to have a loyal following with gamers who purchase from GameStop exclusively.