* Stock gains more than 4 percent
* Lowers 2012 sales forecast but maintains 2012 earnings
* Q3 EPS beats Street view
(Adds analyst, executive comments, details throughout)
By Malathi Nayak
SAN FRANCISCO, Nov 15 GameStop Corp, the
world's largest retailer of videogame products, reported a
stronger-than-expected profit on Thursday but lowered its sales
forecast for this year due to uncertainty around the holiday
shopping season as the video game market struggles.
Grapevine, Texas-based GameStop forecast same-store sales in
2012 would drop 6 percent to 9 percent, compared with a 2 to 10
percent decline projected previously.
"We've continued to find new ways to drive revenues and
margins in our stores and that's enabled us to hold on to some
earnings in these difficult times," Chief Financial Officer Rob
Lloyd said in an interview.
"We're still a little bit cautious in that it's a difficult
environment in which to forecast because the industry has been
down," Lloyd said. "And we've got uncertainty surrounding what
the supply of the (Nintendo)Wii U is going to be."
Nintendo Co Ltd is gearing up to launch its Wii U
video game console on Nov. 18. It is the first new home console
device to be sold by a major gaming company in more than six
GameStop hopes the start of a new console cycle with the Wii
U launch and just-released high quality games like Microsoft
Corp's "Halo 4" and Activision Blizzard's
"Call of Duty: Black Ops II" will boost hardware and software
sales this holiday season.
GameStop's shares rose 4.25 percent to $24.48 in afternoon
trading on the New York Stock Exchange.
Sterne Agee analyst Arvind Bhatia said investors seem more
comfortable now with the company's recent efforts to drive
In the last two years, the company has been tackling
decelerating video game sales in a tough market by diversifying
its revenue sources, selling electronics like tablets, digital
video games and used games.
The games retailer said it had repurchased stock worth $76.8
million in the third quarter and announced that its board had
approved a new $500 million share buy-back plan to replace its
existing $242 million repurchase plan. It also announced a
quarterly dividend of 25 cents, same as last quarter.
The company reported adjusted net earnings per share of 38
cents in the third quarter, beating analysts' expectations of 32
"Earnings per share was quite impressive, driven by gross
margins being strong and cost control," Sterne Agee's Bhatia
GameStop said it expects comparable store sales to range
between down 7 percent and up 1 percent in the fourth quarter.
It forecast earnings per share between $2.07 to $2.27 for the
Sales of traditional videogame products such as consoles
have been pressured globally by lower-priced online offerings
and gamers spending more time on tablet computers and cell
Total U.S. sales of videogame software in October dropped 25
percent from a year ago, following a similar trend throughout
the third quarter, according to a report by market research firm
GameStop said sales fell 8.9 percent to $1.77 billion.
Analysts were expecting sales of $1.79 billion, according to
Thomson Reuters I/B/E/S.
Adjusted earnings were $47.2 million, compared with $53.9
million a year ago. The company maintained its previously
announced full-year earnings outlook of between $3.10 per share
to $3.30 per share.
(Reporting by Malathi Nayak; editing by John Wallace, Maureen
Bavdek, David Gregorio and Dan Grebler)