GameStop plunges 11% after company slashes full-year profit outlook
GameStop shares plunged 12 percent postmarket Thursday after the company slashed its full-year earnings forecast.
The gaming retailer slashed its full-year outlook, saying it now expects adjusted earnings per share between $2.55 and $2.75. That range is well below GameStop’s previous guidance for adjusted 2018 earnings between $3 a share and $3.35 a share. GameStop’s new forecast also falls below analyst expectations. Wall Street had projected full-year earnings of $3.04 per share, according to a Refinitiv consensus estimate.
GameStop said it was updating its outlook to adjust for “current sales and margins trends.” It also said the new figures include its planned sale of Spring Mobile.
Rob Lloyd, chief operating officer and chief financial officer, said the company lowered its forecast because it now anticipates weaker fourth quarter results.
“While our Black Friday and Cyber Monday sales were strong, we anticipate that our fourth quarter sales will skew more towards hardware than initially planned which, along with underperformance of certain titles, weakness in pre-owned and recent sales promotions, will result in fourth quarter earnings that are below our previous expectations,” Lloyd said in a statement.
The fourth quarter includes the important holiday sales season, typically a make or break period for retailers and those that depend on the sales of consumer electronics and games.
The reduced projections outweighed GameStop’s better-than-expected third-quarter results. The company reported adjusted earnings of 67 cents per share on $2.08 billion in sales. Analysts had projected adjusted earnings of 57 cents a share on revenue of $2.03 billion, according to Refinitiv consensus estimates.