GameStop’s stock plummeted 13% in premarket trading as the U.S. videogame retailer issued a bleak outlook amid plunging sales.
Chief Executive George Sherman said the long wait for new consoles would see the declining trend continue until the fourth quarter of 2020.
The gaming retailer said it expected full-year comparable-store sales to decline by a “high-teens” percentage, and earnings per share of $0.10 to $0.20. Analysts surveyed by FactSet had expected same-store sales to decline 0.3% and $1.21 a share.
GameStop’s third-quarter results also missed expectations as revenue declined 26% to $1.44 billion. It narrowed losses to $83.4 million from $488.6 million a year earlier.
Sherman said: “Our third-quarter results continue to reflect the prevailing industry trends, most notably the unprecedented decline in new hardware sales seen across the market as the current generation of gaming consoles reach the end of their life cycle and consumers delay their spending in anticipation of new hardware releases.”
Sherman added that the trend would continue until the fourth quarter of 2020, as new consoles weren’t being introduced until late next year.
Looking ahead. GameStop’s outlook is certainly gloomy but the chief executive’s warning that the declining hardware sales trend will continue until late 2020 is more worrying.
Credit Suisse analyst Seth Sigman said it was “difficult to see how results would improve” in a new console cycle but that what happens in the meantime was more concerning. Benchmark Research maintained a sell rating on the stock with a target price of $3, down from $6.51 at the close on Tuesday.
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December 11, 2019 at 07:40PM
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GameStop Plunges on Tumbling Sales and Bleak Outlook - Barron's
"sales" - Google News
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