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GameStop's holiday sales disappoint, shares drop

NEW YORK (Reuters) - GameStop Corp’s same-store sales during the holiday shopping season rose a less-than-expected 3.4 percent, sending its shares lower on Thursday.

People play video games inside a GameStop retail store in New York March 18, 2010.REUTERS/Shannon Stapleton

“We’ll have to sort out the market reaction. I’m not sure what that means ... but in general we’re hearing favorable things,” GameStop’s Chief Executive Paul Raines said in an interview.

Its shares fell 4.6 percent to $20.87 on the New York Stock Exchange.

Sales for the holiday period -- the key season for retailers -- were about $3.02 billion, a 5.4 percent increase from a year ago.

“This was slightly disappointing,” said Wedbush Securities analyst Michael Pachter, who had been expecting at least a 5 percent increase in same-store sales for the biggest U.S. video game retailer.

For the nine-week holiday period ending January 1, new video game software sales increased 3.3 percent, due to hot titles like “Call of Duty: Black Ops” from Activision Blizzard. Sales of hardware such as game consoles rose 7.4 percent, driven by Microsoft’s Kinect motion-gaming device.

“Kinect was huge,” GameStop’s Raines said, adding that the retailer had to speed up shipments from Asia to meet demand.

Raines said the company is still developing its forecast for 2011, but he expects Nintendo’s 3DS, a handheld device expected to be launched in the United States in March, to be a hit.

“The 3-D aspect of it is very hot and we think it’s going to be a great launch in the spring,” Raines said.

The CEO added that Kinect sales would continue to be strong this year and that Sony’s marketing for its motion-sensor controller the Move, as well as new games like Electronic Arts’ “Tiger Woods PGA Tour 12” focusing on the Masters golf tournament, would sustain the momentum of motion-sensor gaming.

GameStop reiterated its profit forecast for the fourth quarter. The company expects earnings of $1.53 to $1.59 a share, in line with analysts’ average view of $1.56 a share, according to Thomson Reuters I/B/E/S.

Thursday’s higher sales numbers echoed comments made by GameStop executives in October about 2010 holiday sales topping those of 2009.

Microsoft said on Wednesday it had sold more than 8 million of the Kinect, which outpaced Sony Corp’s Move. ID:nWEN5108

Reporting by Liana B. Baker, editing by Dave Zimmerman and Maureen Bavdek

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