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Tuesday, April 2, 2019

GameStop (GME) reported earnings on Tue 2 Apr 2019 (a/h)

** charts before earnings **


** charts after earnings **

GameStop beats by $0.02, misses on revs, comps +1.4%; guides AprQ EPS below consensus; guides FY19 revs below consensus; concludes review of strategic and financial alternatives, announces $100 mln profit improvement initiative 
  • Reports Q4 (Jan) earnings of $1.60 per share, excluding non-recurring items, $0.02 better than the S&P Capital IQ Consensus of $1.58; revenues fell 7.6% year/year to $3.06 bln vs the $3.28 bln S&P Capital IQ Consensus.
    • Co reports same store comps of +1.4% (+3.4% increase in the US and -2.9% decrease internationally). In terms of why revenue declined but comps were up, it was the shift in the company's fiscal calendar for the 53rd week in fiscal 2017 and the timing of the Call of Duty launch.
  • Co issues downside guidance for Q1 (Apr), sees EPS of $(0.05)-0.00 vs. $0.27 S&P Capital IQ Consensus.
  • Co issues downside guidance for FY19, sees FY19 revenue decline of 5-10%, which we compute as $7.46-7.87 bln vs. $7.88 bln S&P Capital IQ Consensus. Co guides to FY19 same store comp decline of -10% to -5%.
  • Co concludes review of strategic and financial alternaitves. Co anticipates the retirement of the $350 mln in unsecured senior notes scheduled to mature in October 2019 to be completed by April 4, 2019. This will significantly reduce leverage. Co currently has $300 mln available under the current share repurchase authorization.
  • "As we think about 2019 and beyond, we recognize the challenges facing our pre-owned video game business and are prepared to address them as we continue to evolve our business model going forward. Importantly, we will continue to leverage our powerful brand to drive growth and, with a new cost savings and profit improvement initiative in place, we will focus our efforts on driving profitability."
  • Co says it's embarking on a cost savings and profit improvement initiative. This includes supply chain efficiencies, operational improvements, expense savings and pricing and promotion optimization. The initial estimates, which are preliminary and could change, the co is working to achieve annualized operating profit improvements of approximately $100 mln. Co expects minimal impact on FY19 results.

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