(Reuters) - GameStop Corp said holiday sales were off to a strong start, easing concerns that recent data showing a slowdown in the industry would hurt the video game retailer.
Sales of traditional video game products such as consoles have been struggling globally as gamers turn to lower-priced online games and spend more time gaming on tablets and phones. GameStop has weathered the trend by focusing on selling used games to console owners.
The company on Thursday said it expects fourth-quarter earnings of $1.66 to $1.76 per share, compared with an average Wall Street estimate of $1.74, according to Thomson Reuters I/B/E/S.
It issued the forecast after reporting third-quarter earnings that met expectations. Its shares were slightly lower, stabilizing after a major sell-off earlier in the week.
Chief Executive Paul Raines told Reuters in an interview that while its customers appeared to be under pressure in the third quarter, the fourth quarter “is off to a great start.”
“Consumers and gamers have met our expectations. We were pretty bullish. The holiday titles are off to great start,” Raines said.
He added that GameStop’s “buy, sell, trade” model of selling new games and offering to buy back used games has benefited the company even as consumers cut back on spending.
Shares of GameStop were down 1 percent in morning trading. The shares fell 10 percent in the first three trading days this week as Wall Street braced for poor third-quarter results.
The shares dropped after the NPD research firm released data last Friday showing that sales of new video games were not as strong in October as Wall Street had expected.
“There was a lot of concern GameStop would have a huge miss ... but what they reported on Thursday wasn’t as bad as feared,” said Sterne Agee analyst Arvind Bhatia.
GameStop said sales of Electronic Arts Inc’s “Battlefield 3” and Microsoft Corp’s “Gears of War 3” helped its results.
Sales rose 2.5 percent to $1.95 billion, just shy of the average Wall Street forecast of $1.96 billion.
Net income slipped 1 percent, to $53.7 million from $54.3 million a year earlier.
Earnings per share were boosted by the company’s repurchase of 1.92 million shares in the quarter. Earnings per share rose to 39 cents from 36 cents a year earlier, matching analysts’ average forecast, according to Thomson Reuters I/B/E/S.
On Thursday, Activision Blizzard, the largest U.S. video game publisher, said its hit game “Call of Duty: Modern Warfare 3” set a new industry record by generating $775 million in sales in its first five days in stores in November.
GameStop shares were down 23 cents to $22.29 on the New York Stock Exchange.
Reporting by Liana B. Baker in New York; Editing by Derek Caney and John Wallace