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GameStop profit forecast misses Street on weak demand for consoles

Reuters
The GameStop store sign is seen at its shop in Westminster, Colorado January 14, 2014. REUTERS/Rick Wilking

(Reuters) - GameStop Corp forecast a weaker-than-expected profit for the full year, as demand for the new PlayStation 4 and Xbox One consoles fail to make up for falling sales of earlier versions.

Shares of the world's largest retailer of video game products, which also reported a quarterly profit that missed estimates, fell 5 percent in extended trading.

Demand for Microsoft Corp's Xbox One and Sony Corp's PlayStation 4 consoles cooled off in recent months after the holiday shopping season. Both consoles were launched in November 2013.

GameStop's new video game hardware sales fell 30.2 percent to $808.8 million in the fourth quarter ended Jan. 31, lower than the $844.8 million analysts had expected, according to market research firm FactSet StreetAccount.

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Console hardware declined 5 percent in February, as gains in eighth-generation console sales could not offset the 41 percent loss in dollar sales of seventh-generation hardware, market research firm NPD said in an email.

The eighth-generation video game consoles include Nintendo's Wii U, Sony's PlayStation 4 and Microsoft's Xbox One. These followed the seventh-generation Nintendo's Wii, PlayStation 3 and Xbox 360.

GameStop forecast earnings of $3.60-$3.80 per share for full year ending January 2016. Analysts on average were expecting $4.04 per share, according to Thomson Reuters I/B/E/S.

GameStop said it expects a strong dollar to have a negative impact of about $300 million to $400 million on sales and 6 to 9 cents per share on profit for the full year.

Net income rose to $244.1 million, or $2.23 per share, in the fourth quarter ended Jan. 31 from $220.5 million, or $1.89 per share, a year earlier.

Excluding items, the company earned $2.15 per share.

Total global sales fell to $3.48 billion from $3.68 billion. Comparable store sales fell 1.8 percent.

Analysts on average expected earnings of $2.17 per share on revenue of $3.6 billion, according to Thomson Reuters I/B/E/S.

GameStop's shares closed at $38.79 on the New York Stock Exchange on Thursday. The stock has fallen about 8 percent in the six months to Thursday's close.

(Reporting by Devika Krishna Kumar in Bengaluru; Editing by Joyjeet Das)