GameStop’s 4th-quarter results and 2010 forecast top expectations; shares rise

GameStop shares jump on 4Q profit and ‘10 forecast

GRAPEVINE, Texas — GameStop’s fourth-quarter results and 2010 forecast topped Wall Street expectations Thursday and company shares jumped more than 6 percent on its outlook for the year.

Consumers still don’t seem to be shopping like they used to. GameStop, the world’s biggest video game retailer, reported a dip in net income. And sales at stores open at least a year dropped 7.9 percent with few people splurging on new game consoles.

But higher game sales helped the company edge out expectations. It earned $215.9 million, or $1.29 per share, in the three months ended Jan. 30. That’s down 7 percent from $232.3 million, or $1.39 per share, a year ago.

Analysts polled by Thomson Reuters expected $1.27 per share, on average.

GameStop said it expects its profit to grow this year by 14 percent to 18 percent. It projected earnings per share of $2.58 to $2.68 for the fiscal year ending in January 2011, topping the average forecast of $2.57.

The company is forecasting revenue growth of 4 percent to 6 percent, implying roughly $9.44 billion to $9.62 billion. Analysts expected $9.38 billion.

CEO Dan DeMatteo said the company picked up market share from rivals, with consumers responding well to GameStop’s “buy-sell-trade” model, which gives them store credit for used games it then resells at a discount.

Overall revenue for the quarter, including results from stores that opened in the past year, edged up by about 1 percent to $3.52 billion, where analysts expected $3.45 billion. Video game hardware revenue dropped 9 percent to $738 million, while game revenue climbed 5 percent to $1.56 billion.

Full-year earnings for fiscal 2009 came to $377.3 million, or $2.25 per share, down from $398.3 million, or $2.38 per share, the year before. Full-year revenue was up 3 percent to $9.08 billion.

Shares of GameStop Corp. rose $1.27, or 6.4 percent, to $21.13 in afternoon trading. The stock has traded in the 52-week range of $17.12 and $32.82.