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GameStop Posts Fair Earnings but is Optimistic on Upcoming Console Releases

  +Follow August 22, 2013 2:09PM
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Retailers in general are moving away from physical media towards the digital model, as companies like Best Buy Co. Inc (BBY) devote less and less floor space to CDs and DVDs and Redbox operator Outerwall Inc. ($OUTR) desperately scramble to branch out into other services. It looked like used video game retailer GameStop Corp (GME) was no different, and would likewise have to adapt or wither away.

A superficial look at their second quarter profits from 2013 suggests they are indeed going the way of the Blockbuster Video. In their second quarter 2013 earnings report, the game retailer revealed profits fell 50 percent for the company. Additionally, same store sales dropped 11 percent, suggesting the sea change to digital is indeed killing the company.

However, GameStop beat earnings expectations, and revealed positive news on two fronts. Digital receipts for the company grew 17 percent. Also, the retailer voiced optimism concerning one area of physical media that can’t be replaced by digital. It’s an area where they expect to shine through the rest of the year: video game consoles.

According to the retailer, over half of gamers expect to buy a new console this year, and GameStop’s CEO Paul Raines expects “a lot of energy” in that industry that should prop up the company for the foreseeable future.

So while physical content might have rocky future, the release of consoles like Sony Corporation’s (SNE) Playstation 4 and Microsoft Corp.’s (MSFT) Xbox One should more than compensate. Indications from Microsoft and Sony seem to confirm this.

On Aug. 20 Sony said preorders for Playstation 4 had already topped a million, exceeding their own expectations. The company announced on Aug. 21 that the console will hit stores on Nov. 15.

Microsoft will release the anticipated Xbox One sometime in November. The tech giant previously reversed controversial gaming restrictions, which would have severely hampered the ability of GameStop to sell used games, which significantly invigorated the retailer’s outlook.

GameStop outlook continues to brighten. The retailer calls for earnings to increase significantly in the coming quarter, and expects same-store sales to rise between 11 and 15 percent.

For their second quarter 2013 earnings report, GameStop reported a net profit of $10.5 million, or $0.09 per share, versus the net profit of $21 million, or $0.16 per share, from the same period a year ago. Revenue for the quarter was $1.38 billion, as compared to $1.55 billion from the previous year. Analysts were expecting a profit of $0.05 per share on revenues of $1.36 billion.

GameStop is up 10.88 percent to hit $52.80 a share.

(image of GameStop courtesy of Wikimedia Commons)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for GME
OTPicks.com
24 Nov 14 09:22:59
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OTPicks.com
24 Nov 14 09:22:58
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24 Nov 14 09:17:55
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GuruFocus
24 Nov 14 09:16:47
GameStop Earnings Were A Mixed Number Match http://t.co/9cPqEs8noT $GME http://t.co/IfennZP4jP
The Legacy News
24 Nov 14 09:14:08
GameStop Corp. Price Target Cut to $52.00 by Analysts at Bank of America $GME http://t.co/JdBYIvgF64
Foster Corral
24 Nov 14 09:11:18
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Jaylon Cleary
24 Nov 14 09:09:36
$ACT Small-cap stocks making 52-wk highs $GME $WCC $OPK #economy http://t.co/GobIxnT8ZE
iHangout
24 Nov 14 09:01:37
leahanne: Stock Market News: Volume Alert - GME 37.82 Gamestop Corp $GME Hit a http://t.co/jcVxbG6bSV
iHangout
24 Nov 14 09:01:27
leahanne: $GME Gamestop Corp.: Volume Alert - GME Stock 37.82 Gamestop Corp $GME http://t.co/6JN9ZadqYW
leahanne
24 Nov 14 09:00:18
Volume Alert - GME 37.82 Gamestop Corp $GME Hit a high today of 37.92 Closing the day 10:30 at 37.82 -0.04 -0. http://t.co/csBepZNZrG
leahanne
24 Nov 14 08:59:56
$GME Volume Alert - GME Stock 37.82 Gamestop Corp $GME Hit a high today of 37.92 Closing the day 10:30 at 37.82 -0. http://t.co/GNDD5jOsfE
Future Tech Investor
24 Nov 14 08:48:18
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24 Nov 14 08:41:23
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24 Nov 14 08:38:41
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Thomas Collins
24 Nov 14 08:32:55
$GME 3 Things to Watch When GameStop Corp. Reports Earnings This Week http://t.co/CEAwTPOYu3
US Banking News
24 Nov 14 08:29:43
GameStop Corp. PT Lowered to $52.00 at Bank of America $GME http://t.co/BYip9fLBeh
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24 Nov 14 08:26:47
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24 Nov 14 08:21:35
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Shiraz Lakhi
24 Nov 14 08:02:39
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SuperData
24 Nov 14 07:58:30
GameStop’s stock continues in the red as digital console gaming picks up the pace. $GME
Duke Rexx
24 Nov 14 07:45:44
$GME all out of the commons for now
US Consumer News
24 Nov 14 07:43:34
GameStop Corp.'s PT cut by Bank of America to $52.00. buy rating. http://t.co/VKPUB4fIi9 $GME #GME
WKRB News
24 Nov 14 07:42:21
GameStop Corp. Price Target Cut to $52.00 $GME http://t.co/c2vXgfuxOc
Analyst Ratings
24 Nov 14 07:38:52
GameStop Corp.'s PT cut by Bank of America to $52.00. buy rating. http://t.co/JwJtoAdy9K $GME #GME
Matt Stohl
24 Nov 14 07:38:46
Bought 3% position in $RNA at $18.50 and 3% position in $GME at $37.81.
Zero Filter
24 Nov 14 07:38:23
While $GME shorts keep blabbing about misguided demise of co #buyback unleashing underway $BBY $SPY $AMZN $T $AAPL @CNBCFastMoney
Stock Screener
24 Nov 14 07:34:26
Advanced Stock Screener rated "Gamestop Corporat" $GME 88/100 strategy: Dividend Value http://t.co/gi9zrfpDFE @AvStockScreener #stockmarket
Selling_Options
24 Nov 14 07:29:16
$GME is getting some life and my $35-$30 put spreads are looking good right now :)
Duke Rexx
24 Nov 14 07:24:00
$GME out some .78 covers my losses from before + small gain. riding rest for more gains. Still have call options. waiting 4 signal on daily
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24 Nov 14 07:19:58
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TrendTrader4u
24 Nov 14 07:18:03
Commented on StockTwits: $GME could also test 38.42 area. http://t.co/WBoqtgrhW2
Duke Rexx
24 Nov 14 07:15:55
$GME nice. moving up stops again to cover for losses and more here.
TrendTrader4u
24 Nov 14 07:15:42
Commented on StockTwits: $GME target reached. http://t.co/Njqt0FWsNM
Consestimate
24 Nov 14 07:06:50
How GameStop Plans to Dominate Black Friday Video Game Sales. $GME, $MSFT, $DIS. http://t.co/dBJ8y7CTwH
sunflower
24 Nov 14 07:06:42
sell $GME, $37.70
TrendTrader4u
24 Nov 14 07:05:57
Commented on StockTwits: $GME missed by tick but stop in place for rest. http://t.co/r2xevxXWMR
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24 Nov 14 07:03:59
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TrendTrader4u
24 Nov 14 07:02:31
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TrendTrader4u
24 Nov 14 07:00:35
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TrendTrader4u
24 Nov 14 07:00:06
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Todd Sullivan
24 Nov 14 06:54:44
$GME mgmt said "old gen console" used game sales slowing significantly but had no idea of of % of old gen vs new gen in inventory
TrendTrader4u
24 Nov 14 06:54:43
$GME long above 37.31 with stop 37.03
Duke Rexx
24 Nov 14 06:54:38
$GME pretty weak so far, moving up stops to breakeven on new adds
Todd Sullivan
24 Nov 14 06:52:13
anyone thinking of getting long $GME, do urself a favor and listen to Q&A on earnings call, mgmt had no good answers for tough Q's on model
				
				
  +Follow August 22, 2013 2:09PM
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