November 29, 2018 / 10:18 PM / 9 months ago

GameStop cuts full-year adjusted profit forecast, shares fall

Nov 29 (Reuters) - GameStop Corp cut its full-year adjusted profit forecast on Thursday, as the world’s largest video game and gaming console retailer expects higher hardware sales and continued pre-owned category weakness, sending shares down 13.8 percent.

The company, which is exploring a potential transaction after receiving buyout interest, last week said it would sell its Spring Mobile business to Prime Communications LP for $700 million.

“We are evaluating all aspects of our business, including our store and omni-channel experience, cost structure, strategic and economic partnerships ...,” Chief Operating Officer and Chief Financial Officer Rob Lloyd said on Thursday.

The company said it now expects full-year adjusted profit to range between $2.55 and $2.75 per share, down from $3.00 to $3.35 earlier.

Sales of the company’s pre-owned products fell 13.4 percent to $396.9 million in the third quarter, while its technology brands business also reported about 12 percent drop to $171.1 million.

Sales in the company’s hardware business rose 12.8 percent to $349 million, while sales in its video game retail business rose about 11 percent to $720.7 million.

The growth was mostly driven by higher demand for Xbox One X and Sony PS4 and big game launches by Activision Blizzard Inc and Take Two Interactive Software Inc such as “Call of Duty: Black Ops 4” and the much-awaited “Red Dead Redemption 2”.

The company reported a net loss of $488.6 million, or $4.78 per share, in the three months ended Nov.3, compared with a year-ago profit of $59.4 million, or 59 cents per share.

GameStop recorded a goodwill impairment charge of $557.3 million.

Net sales rose to $2.08 billion from $1.99 billion.

Excluding items, GameStop earned 67 cents per share.

Analysts on average had expected a profit of 57 cents per share and revenue of $2.03 billion, according to IBES data from Refinitiv. (Reporting by Arjun Panchadar and Laharee Chatterjee in Bengaluru; Editing by Sriraj Kalluvila)

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