GameStop Corp.(NYSE: GME) stock lost over 13% on August 25th, 2017 (as of 12:38PM EDT; Source: google finance) post their weak second quarter of 2017 update leading to a total stock fall of over 28% in the last six months. Overall global sales surged 3.4% to $1.69 billion, leading to a consolidated comparable store sales rise of 1.9%. On the other hand, the group US sales fell 1.4% despite a 9.8% rise of international sales. Net earnings fell to $22.2 million, or $0.22 per diluted share during the quarter from a net earnings of $27.9 million, or $0.27 per diluted share in the prior corresponding period. On the other hand, GameStop New hardware sales rose 14.8%, driven by their ongoing demand for Nintendo Switch. But New software sales and pre-owned sales fell 3.4% and 7.5%, respectively, hurt by lagging Xbox One sales. This overall weak performance hurt the investor’s sentiment today with the stock touching a new low today. Despite having an upside of 21.2% with a target price of $23, as per five analysts (Source: tipranks.com), investors need to be cautious on the stock.
However, the group sees the Nintendo Switch, the launch of Microsoft’s Xbox One X, and a solid slate of AAA titles would boost their video game category in the second half. Moreover, they forecast their Technology Brands AT&T Wireless business would benefit from a better consumer demand driven by the launch of innovative new mobile handsets, including Apple’s next-generation iPhone. Worldwide omnichannel sales surged 86.2% as the company promoted and secured leading market share of Nintendo Switch. GameStop leveraged all their sales platforms, including website, web-in-store, pickup-at-store, ship-from-store, and mobile during the launch.
Meanwhile, the group’s digital sales rose 28.1% yoy to $46.5 million, while non-GAAP digital receipts enhanced 17.4% to $241.4 million boosted by downloadable content and mobile. Collectibles sales rose 36.1% to $122.5 million, boosted by an assortment of licensed merchandise including Pokémon and Marvel products. The company added five Collectibles stores during the quarter, leading to a total global portfolio to 99 stores. GameStop sees their Collectibles business on track to meet their 2017 revenue target of $650 million to $700 million. Technology Brands sales surged 7.0% to $188.3 million, boosted by AT&T authorized retail stores. GameStop expects earnings per share of $3.10 to $3.40 for full year subject to the success of hardware sales to date. They forecast full-year comparable store sales to be at the high end of their earlier range of -5.0% to 0.0%.