Key Takeaways From GameStop’s Q4 Earnings
GameStop (NYSE:GME) reported mixed fourth quarter and full year results that were hampered by weak hardware and software sales during the holiday season. The company posted Q4 EPS of $2.38, 9 cents higher than market expectations, as well as net revenues of $3.05 billion, which were down 14% year-over-year (y-o-y). For the full year, the company posted revenue of $8.61 billion, a decline of 8% from the prior year and EPS of $3.77, down 3%. Comparable store sales declined 16.3% for the fourth quarter and 11% for the full year.
In the fourth quarter, GameStop’s hardware sales dipped more than 29% and software sales were down 19%, primarily due to declining demand for games and lower average revenue per piece. The video game market remained soft due to declining demand of previous generation consoles and a relative lack of fresh game titles. These appear to be the primary reasons behind the company’s lackluster performance during the quarter. However, GameStop’s non-gaming business continues to perform well, with technology brands and collectibles registering 44% and 28% growth in revenues, respectively.
- Will GameStop Stock Continue To Rise?
- What’s Next For GameStop Stock After Rising 26% Last Week?
- Can GameStop Stock Advance Continue After A 92% Surge In A Week?
- Vaxart, Macy’s, Gogo: Will These Stocks See A GameStop Like Short Squeeze?
- Time To Sell GameStop Stock After A 170% Rally?
- How Is GameStop Likely To Have Fared In Q1?
In January, GameStop reported a 16.4% decline in global sales during the holiday season (November and December). This trend continued in January as well, impacting Q4 revenues. Total comparable store sales declined almost 16% in the same period. The company attributed the weaker-than-expected comps to weak sales of Call of Duty: Infinite Warfare and Titanfall 2. The holiday season also witnessed declines in hardware and software sales. New hardware sales decreased 29% over the prior year period, primarily due to weak sales of PlayStation 4 and Xbox One. In the same period, software sales declined 19% due to a reduced number of game launches and lower average selling prices during the holiday season.
Going forward, GameStop expects to stem the decline in revenues and expects to post a marginal increase in revenues in 2017. However, the company expects comps to remain negative, ranging from -5% to 0%, in the current year as well. For the full year, the company expects to generate EPS in the range of $3.10 to $3.40, primarily due to growth in Tech Brands and collectibles along with higher expected sales of Nintendo Switch.
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)