(Adds GameStop share reaction, analyst comments, background)
March 18 Wal-Mart Stores Inc will allow
U.S. shoppers to trade in used videogames for anything from
groceries to gadgets, a move that could dent the profit of
GameStop Corp, the largest dealer of used videogames.
GameStop shares fell as much as 6 percent in morning
trading, making it one of the top percentage losers on the New
York Stock Exchange.
Wal-Mart said on Tuesday its trade-in service will accept
games for popular consoles like the Sony Corp's
PlayStation3 and Microsoft Corp's Xbox 360, and
customers can in return buy anything at Walmart and Sam's Club.
"Gaming continues to be an important business for us and
we're actively taking aim at the $2 billion pre-owned videogame
opportunity," Duncan Mac Naughton, chief merchandising and
marketing officer for Walmart U.S., said in a statement.
The move would pit Wal-Mart against retailers such as Best
Buy Co and Target Corp, besides GameStop, which
also have trade-in programs for used videogames. Such games are
refurbished and sold later.
While GameStop would be unlikely to lose market share, the
company would be forced to go into a price war to both buy used
games and to sell the refurbished games, according to Stifel
analyst David Schick.
"We know that WMT "invests in price" ... and we expect GME
will match an increasingly competitive marketplace to protect
(market) share," Schick wrote in a note to clients.
GameStop has already warned of sagging sales of games played
on older versions of Xbox and PlayStation consoles.
Sales of videogame products such as consoles have been
pressured by lower-priced online offerings and as gamers spend
more time on tablet computers and phones.
GameStop shares were down 5 percent at $37.82 in late
morning trading on Monday, while Wal-Mart shares were up
marginally at $74.87.
(Reporting by Supriya Kurane and Abhirup Roy in Bangalore;
Editing by Gopakumar Warrier and Savio D'Souza)