GameStop Posts Strong Earnings on Sales of Mortal Kombat X, Evolve Games
GameStop Corp, the world’s largest retailer of video game products, reported better-than-expected profit and revenue, helped by strong sales of new releases such as “Mortal Kombat X” and “Evolve” and an increase in mobile game downloads.
GameStop’s shares rose 5.3 percent in extended trading after the company also forecast a second-quarter profit largely above analysts’ average estimate.
The company forecast a profit of 21 cents to 25 cents per share for the current quarter. Analysts were expecting 21 cents, according to Thomson Reuters I/B/E/S.
Retail sales of “Mortal Kombat X” ranked number one among NPD Group’s games in April.
GameStop has its hopes pinned on the June release of “Batman: Arkham Knight”, the latest in the “Batman” Arkham” series by Warner Bros. Interactive Entertainment.
“I do see console sales really remaining constant,” GameStop COO Tony Bartel said in an interview. “I do think we are going to continue to see a strong hand held performance which is something that we definitely saw in the first quarter.”
New video game hardware sales rose 0.3 percent to $439.7 million in the first quarter ended May 2 while sales of new game software rose about 10 percent.
According to a report by market research firm NPD, U.S. sales of video game hardware fell 4 percent in April, while software sales were up 13 percent.
Grapevine, Texas-based GameStop said first-quarter revenue rose 3.2 percent to $2.06 billion. Comparable-store sales rose 8.6 percent.
Revenue from its mobile and consumer electronics business rose about 34 percent to $136.8 million.
Net income rose to $73.8 million, or 68 cents per share, in the first quarter from $68 million, or 59 cents per share, a year earlier.
Analysts had expected a profit of 59 cents per share on revenue of $2.01 billion.
“The outperformance is driven by new software sales, that’s one of the primary reasons…given that main concern on the stock is the impact of digital download on new software sales,” SterneAgee CRT analyst Arvind Bhatia said.
The company also raised its full-year earnings per share forecast by 3 cents to $3.63-$3.83 to reflect fewer outstanding shares