* Holiday season sales flat from year earlier
* Q4 profit estimate cut to $1.25 to $1.29 a share
* Shares down as much as 19 pct, close 14.9 pct lower
(Adds CEO interview)
By Paul Thomasch
NEW YORK, Jan 7 GameStop Corp (GME.N) said
holiday sales failed to improve from 2008 and cut its
fourth-quarter profit forecast on Thursday, sending shares of
the biggest U.S. videogame retailer to a 13-month low.
Although the company blamed a woeful combination of a weak
economy, bad weather and product shortages, other retailers had
far less trouble overcoming winter storms and consumer worries,
with Macy's Inc (M.N) and Costco (COST.O) posting higher sales
figures for the most important sales period of the year.
"Ugly is a good way to term it," said FTN Equity Capital
Markets analyst Anthony Chukumba. "I'm extremely disappointed,
as I'm sure investors will be. I think it really hurts
GameStop said sales for the holiday period totaled $2.86
billion, little changed from a year earlier. That came as a
surprise to investors, after GameStop previously said sales
were off to a strong start for the holiday season.
Chief Executive Dan DeMatteo, in an interview, said one
issue is that 2008's holiday period was actually relatively
healthy, even with the economy in a spiral. That made for tough
comparisons in the most recent holiday period.
"We had a very good fourth quarter last year," he said,
referring to 2008. This time around, he said, business was
strong during the fall when new games rolled out, but "that did
not translate as well to the gift givers as we thought it
For the 2009 period, videogame software sales rose 4
percent -- due to hot titles like "Call of Duty: Modern Warfare
2" from Activision -- but sales of hardware, such as game
consoles, dropped a steep 8 percent.
Shortages played a role, DeMatteo said, citing products
such as Sony Corp's (6758.T) PlayStation 3, Nintendo Co Ltd's
7974.OS Wii, and the game New Super Mario Bros Wii.
To some extent, the shortages make sense, given a broader
move by retailers to keep inventories lean after a tough year,
particularly when it came to consoles, analysts said. But the
inventory issue also raised concerns among sone.
"I don't know how you end up with shortages of Super Mario
Wii," Sean McGowan, an analyst with Needham & Co. "You know
you're going to sell this game, just make a gazillion of
Competition likely also hurt GameStop, even with its major
footprint in the industry. One red flag was raised in December,
when Wal-Mart Stores Inc (WMT.N), the world's largest retailer,
announced it would lower prices on popular video games by $10
each and offer a $50 gift card with the purchase of a Wii
"It was very disappointing," McGowan said of the sales
results. "The Wal-Mart competition had to have some impact. It
was an especially competitive environment across a lot of
Given the weaker-than-expected holiday period, the company
cut its profit forecast for the fourth quarter. GameStop
expects to post earnings of $1.25 to $1.29 a share, well below
analysts' average view of $1.57 a share, as reported by Thomson
That forecast is also below its own previous expectation of
fourth-quarter earnings per share of $1.47 to $1.65.
Same-store sales in the quarter are expected to fall 8.5
percent to 9.5 percent.
GameStop shares closed down $3.57, or 14.9 percent, at
$20.46 on the New York Stock Exchange. The shares had fallen as
much as 19 percent earlier in the session to hit $19.43, their
lowest level since December 2008.
(Reporting by Paul Thomasch; Editing by Derek Caney, Maureen
Bavdek, Gary Hill)