* Profits edge past Wall Street forecasts
* Same-store sales growth seen after 9 quarters of decline
* Shares jump about 10 pct
By Malathi Nayak
Aug 22 GameStop Corp raised its 2013
earnings forecast on Thursday, counting on new consoles from
Microsoft Corp and Sony Corp to boost holiday
season spending on video games and reverse the sector's decline.
GameStop shares surged about 10 percent after quarterly
results edged past Wall Street's expectations.
The U.S. video game industry has shrunk for years as gamers
have spent more time with free-to-play software on tablets and
smartphones. The industry is counting on the November release of
Sony's PlayStation 4 and Microsoft's Xbox One to re-ignite
interest in big-label gaming.
GameStop president Tony Bartel said the company will turn
the corner this holiday season, propelled by new consoles with
higher resolutions and processing power, and that also use the
cloud for easier game playing and consumption of media such as
television and on-demand video.
In the current quarter, the company will benefit also from
several big releases such as "Battlefield 4" from Electronic
Arts and Take-Two Interactive Software's "Grand
Theft Auto V."
Executives said sales from the recent launch of Disney's
"Infinity" have exceeded expectations, but they did not provide
Bartel said the second quarter was the ninth straight
quarter of declining same-store sales, "and we're putting a
flag in the ground, and saying that that is the end ... for
quite some time, as we see growth from this point forward."
He added: "We really believe we are at the starting line of
a very long line of growth quarters."
GameStop said it expects full-year earnings in the range of
$3.00 to $3.20 per share, higher than its previous forecast of
$2.90 to $3.15. It also gave an improved forecast for same-store
sales for fiscal 2013, saying they would range between a drop of
3.5 percent and an increase of 1.5 percent. The previous range
was between a drop of 5 percent to growth of 1.5 percent.
Arvind Bhatia, an analyst at Sterne Agee, said Gamestop is
gaining market share and that trend will continue through the
third and fourth quarter, which include the holiday season.
"They're betting big on this holiday and if anything,
they're being conservative with their guidance."
"It's an excellent quarter in light of the slowdown the
industry is generally experiencing today," Bhatia said. "Their
cost control was particularly impressive."
Total U.S. sales of video game hardware and software fell 19
percent in July, in line with a downward trend seen since last
year, according to a report by market research firm NPD.
In an environment where consumers are cautious about
spending, GameStop raising its forecast ahead of the release of
new consoles was a big positive, said Mike Hickey, an analyst at
the Benchmark Co.
"Demand for those next gen consoles is high, and supply is
better than expected," Hickey added.
On Tuesday, Sony said it was seeing strong demand for its
next-generation consoles, with pre-orders for more than 1
million PlayStation 4 consoles before the product hits the
shelves on Nov. 15 in North America.
Microsoft is also expected to launch the third version of
its Xbox console in November.
GameStop's net income fell to $10.5 million, or 9 cents per
share, in the second quarter from $21.0 million, or 16 cents per
share, a year earlier, but was higher than the average analyst
estimate of 4 cents per share.
The Grapevine, Texas-based company said total revenue
slipped about 11 percent to $1.38 billion in the quarter ended
July 31. Analysts were expecting revenue of $1.36 billion,
according to Thomson Reuters I/B/E/S.
Shares were up $4.59, or 9.6 percent, at $52.21 in afternoon
trading on the New York Stock Exchange.