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GameStop (GME) Tops on Q4 Earnings & Sales, Guides for '18
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GameStop Corp. (GME - Free Report) reported fourth-quarter fiscal 2017 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company’s results were driven by Nintendo Switch’s stellar performance in the quarter.
In the quarter under review, adjusted earnings came in at $2.02 per share surpassing the Zacks Consensus Estimate of $1.96 but decreased 15.1% from the year-ago period. Also, net sales were up 15% year over year to $3,502.5 million, which outpaced the consensus estimate of $3,253 million.
The company’s sales were driven by robust demand for Nintendo Switch, and collectibles and software. International sales were also strong during the quarter. Further, GameStop witnessed sharp increase in worldwide omni-channel sales.
Let’s Delve Deeper
Consolidated comparable store sales (comps) increased 12.2%, reflecting a gain of 8.3% at international locations and 14.2% at domestic locations.
By sales mix, new video game hardware sales jumped 44.8% to $844 million while new video game software sales were up 12.4% to $1,042.3 million. However, pre-owned and value video game products sales came in at $663.1 million, down 2.6% year over year. Increase in new hardware sales were driven by solid demand for Nintendo Switch while new software sales increased on account of robust title lineup.
Video game accessories sales jumped 37.4% to $327.7 million. While non-GAAP digital receipts increased 10.6% to $413 million, GAAP digital sales rose 7.3% to $61.4 million.
Technology Brands sales were down 14.2% to $219.7 million due to alteration in AT&T’s dealer compensation structure. Additionally, the company stated that performance of Technology Brands was not up to the mark in fiscal 2017 and fell short of its estimates primarily on delay in release of the iPhone 8 and iPhone X as well as due to change in compensation structure by AT&T. The company said similar situation will persist in the first half of fiscal 2018.
Nevertheless, Collectibles sales surged 22.8% to $260.8 million buoyed by growth of licensed merchandise offerings and promotions during holiday season.
GameStop intends to enhance collectibles business to $1 billion by the end of fiscal 2019. Earlier, management had stated that it remains optimistic about non-physical gaming businesses and expects this category to reach approximately 50% of operating earnings by the end of fiscal 2019.
While gross profit inched up 1.6% to $ 1,024.5 million, gross margin contracted 380 basis points (bps) to 29.3%. Adjusted operating income declined 9.7% to $309.8 million while adjusted operating margin shriveled 250 bps to 8.8%.
In fiscal 2017, GameStop shuttered a net of 131 video game stores globally, ending the year with 3,827 video game stores in the United States and 1,969 internationally. The company closed 80 net technology brands store and sold 65 Cricket stores. At the end of 2017, the company has 1,329 AT&T stores and 48 Simply Mac stores. Also, it opened 17 collectible stores and now has 103 stores.
Other Financial Aspects
GameStop ended the quarter with cash and cash equivalents of $864.4 million, net receivables of $182.7 million, long-term debt of $817.9 million and shareholders’ equity of $2,214.5 million.
For fiscal 2018, management projects capital expenditures in the range of $110-$120 million and free cash flow to be approximately $300 million.
Guidance
GameStop expects fiscal 2018 total sales to be down 6% to 2% and projects comps to be flat to down 5%. For the year, management envisions earnings in the range of $3–$3.35 per share. The Zacks Consensus Estimate for fiscal 2018 is pegged at $3.32.
In fiscal 2018, the company anticipates collectibles business to register growth but expects video game business to decrease by mid-single digits.
GameStop carries a Zacks Rank #4 (Sell), which is subject to change following the earnings announcement. The stock has declined 30.8% in the past six months, underperforming the industry’s gain of 11.6%.
Kohl's Corporation (KSS - Free Report) pulled off an average positive earnings surprise of 12% in the trailing four quarters. The company has a long-term earnings growth rate of 6.7% and a Zacks Rank #2 (Buy).
Nordstrom, Inc. (JWN - Free Report) has delivered a positive earnings surprise in the trailing three out of four quarters. The company carries a Zacks Rank of 2.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Image: Bigstock
GameStop (GME) Tops on Q4 Earnings & Sales, Guides for '18
GameStop Corp. (GME - Free Report) reported fourth-quarter fiscal 2017 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company’s results were driven by Nintendo Switch’s stellar performance in the quarter.
In the quarter under review, adjusted earnings came in at $2.02 per share surpassing the Zacks Consensus Estimate of $1.96 but decreased 15.1% from the year-ago period. Also, net sales were up 15% year over year to $3,502.5 million, which outpaced the consensus estimate of $3,253 million.
The company’s sales were driven by robust demand for Nintendo Switch, and collectibles and software. International sales were also strong during the quarter. Further, GameStop witnessed sharp increase in worldwide omni-channel sales.
Let’s Delve Deeper
Consolidated comparable store sales (comps) increased 12.2%, reflecting a gain of 8.3% at international locations and 14.2% at domestic locations.
By sales mix, new video game hardware sales jumped 44.8% to $844 million while new video game software sales were up 12.4% to $1,042.3 million. However, pre-owned and value video game products sales came in at $663.1 million, down 2.6% year over year. Increase in new hardware sales were driven by solid demand for Nintendo Switch while new software sales increased on account of robust title lineup.
Video game accessories sales jumped 37.4% to $327.7 million. While non-GAAP digital receipts increased 10.6% to $413 million, GAAP digital sales rose 7.3% to $61.4 million.
Technology Brands sales were down 14.2% to $219.7 million due to alteration in AT&T’s dealer compensation structure. Additionally, the company stated that performance of Technology Brands was not up to the mark in fiscal 2017 and fell short of its estimates primarily on delay in release of the iPhone 8 and iPhone X as well as due to change in compensation structure by AT&T. The company said similar situation will persist in the first half of fiscal 2018.
Nevertheless, Collectibles sales surged 22.8% to $260.8 million buoyed by growth of licensed merchandise offerings and promotions during holiday season.
GameStop intends to enhance collectibles business to $1 billion by the end of fiscal 2019. Earlier, management had stated that it remains optimistic about non-physical gaming businesses and expects this category to reach approximately 50% of operating earnings by the end of fiscal 2019.
While gross profit inched up 1.6% to $ 1,024.5 million, gross margin contracted 380 basis points (bps) to 29.3%. Adjusted operating income declined 9.7% to $309.8 million while adjusted operating margin shriveled 250 bps to 8.8%.
GameStop Corp. Price, Consensus and EPS Surprise
GameStop Corp. Price, Consensus and EPS Surprise | GameStop Corp. Quote
Store Update
In fiscal 2017, GameStop shuttered a net of 131 video game stores globally, ending the year with 3,827 video game stores in the United States and 1,969 internationally. The company closed 80 net technology brands store and sold 65 Cricket stores. At the end of 2017, the company has 1,329 AT&T stores and 48 Simply Mac stores. Also, it opened 17 collectible stores and now has 103 stores.
Other Financial Aspects
GameStop ended the quarter with cash and cash equivalents of $864.4 million, net receivables of $182.7 million, long-term debt of $817.9 million and shareholders’ equity of $2,214.5 million.
For fiscal 2018, management projects capital expenditures in the range of $110-$120 million and free cash flow to be approximately $300 million.
Guidance
GameStop expects fiscal 2018 total sales to be down 6% to 2% and projects comps to be flat to down 5%. For the year, management envisions earnings in the range of $3–$3.35 per share. The Zacks Consensus Estimate for fiscal 2018 is pegged at $3.32.
In fiscal 2018, the company anticipates collectibles business to register growth but expects video game business to decrease by mid-single digits.
GameStop carries a Zacks Rank #4 (Sell), which is subject to change following the earnings announcement. The stock has declined 30.8% in the past six months, underperforming the industry’s gain of 11.6%.
Three Retail Stocks Likely to Steal the Show
Dillard's, Inc. (DDS - Free Report) delivered a positive earnings surprise in the trailing two quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kohl's Corporation (KSS - Free Report) pulled off an average positive earnings surprise of 12% in the trailing four quarters. The company has a long-term earnings growth rate of 6.7% and a Zacks Rank #2 (Buy).
Nordstrom, Inc. (JWN - Free Report) has delivered a positive earnings surprise in the trailing three out of four quarters. The company carries a Zacks Rank of 2.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>