By Christiana Sciaudone
Investing.com -- GameStop Corp (NYSE:GME) slumped 17% after reporting lower-than-expected sales.
The loss per share of 53 cents was better than the expected loss of 85 cents, but sales of $1 billion missed the estimated $1.09 billion. Revenue was down 30% from a year earlier.
“Our third quarter results were in-line with our muted expectations and reflected operating during the last few months of a seven-year console cycle and a global pandemic, which pressured sales and earnings," said Chief Executive Officer George Sherman in a statement.
The company did not give guidance but said that same-store sales for fiscal November rose 16.5% and net sales of $791.1 million compared to $747.6 million in fiscal November 2019.
The company also blamed weak results on the unplanned shift of some software titles to later in the fourth quarter or fiscal 2021. While same-store sales dropped 25% for the third quarter, e-commerce revenue rose 257%, a figure that is included in comparable-store sales.
GameStop delivered cost cuts of $115 million in the quarter, and closed 74 stores, for a total of 462 shuttered for the year.
Benchmark cut its price target to $5 from $6 and reaffirmed its sell rating, calling the quarter a “dramatic downturn,” Bloomberg said.
The notion that GameStop can compete with Amazon (NASDAQ:AMZN) is “comical,” Benchmark said. “The vast majority of players have scant desire to buy product from a GameStop retail or e-commerce location, and the hottest games are often free-to-play like Fortnite, while GameStop's e-commerce growth is more due to the virus than a compelling platform.”
Shares had rallied more than 175% in 2020 with much of the world's population shuttered at home to prevent the spread of Covid-19.