GameStop says holiday sales up slightly

(Reuters) – GameStop Corp stated holiday sales improved slightly as sales of new video game software from PlayStation 3 and Xbox 360 titles such as &quotCall of Duty three&quot and &quotElder Scrolls V&quot offset a 20 percent drop in hardware sales.

But GameStop shares fell as much as 5 percent in early trading as some investors had been disappointed by the sales numbers, according to analysts.

Sales of standard video game goods such as consoles have been struggling globally as gamers turn to lower-priced on the internet games and invest far more time gaming on tablets and phones. GameStop has weathered the trend by focusing on selling utilised games to console owners.

GameStop said total sales rose slightly to ū.02 billion for the nine-week holiday period to December 31. It said total organization exact same-store sales decreased .three percent — composed of an increase of .three percent in the United States offset by a lower of 1.five percent internationally.

1 of the locations of strength for GameStop was digital sales, which increases 60 percent, led by &quotCall of Duty Elite&quot subscriptions for downloadable content.

Morningstar analyst Liang Feng stated his firm believes GameStop shares are currently &quotmoderately overvalued,&quot but he was surprised by the share sell-off because the margins on hardware sales are a lot lower than software sales. Other analysts agreed.

&quotWe believe GameStop's holiday comps were slightly ahead of expectations and must be viewed favorably in light of a quite promotional holiday period and weaker trends in the hardware category,&quot Credit Suisse analyst Gary Balter stated in a client note.

Chief Executive Paul Raines said in an interview that the business's own data indicated GameStop has managed to win market share from &quotbig box&quot rivals like Best Get Inc in the course of the holiday period. He said the business was helped by its loyalty reward program. &quotIt meant they were turning left to come to GameStop rather than turning correct to go to a huge box.&quot

Ideal Buy also posted weak holiday games sales last week.

The games retailer lowered its same-shop sales forecast for the fourth quarter and full year to be down 1 percent to two percent. The company also retired the remainder of its long-term debt of 贝 million and is now debt cost-free.

GameStop reiterated its outlook of ũ.66 to ũ.76 for the fourth quarter and Ū.82 to Ū.92, excluding debt retirement expenses, for the full year. Analysts on average anticipate fourth-quarter earnings of ũ.73 and full year of Ū.88, according to a poll by Thomson Reuters I/B/E/S.

GameStop's shares fell ũ.13 to ว.74 in mid-day trading on the New York Stock Exchange.

(Reporting By Yinka Adegoke editing by Mark Porter and Maureen Bavdek)

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