Shares of GameStop Corp. (NYSE: GME) plunged about 8% in the after-hours of trading today after it missed first quarter sales estimates. The video game retailer reported adjusted earnings of 7 cents per share, while sales declined 13% year-over-year to $1.5 billion. Analysts had expected the company to post a loss of 3 cents per share on revenue of $1.64 billion.
The Grapevine, Texas-based firm’s GAAP net income was $6.8 million or $0.07 per diluted share compared to net income of $28.2 million or $0.28 per diluted share in the prior-year quarter, which included the Spring Mobile business. Comparable store sales declined 10.3% for the quarter ended May 4, 2019.
Earlier, the gaming firm has guided first quarter 2019 earnings in the range of breakeven to a loss of $0.05 per share. For fiscal-year 2019, GameStop expects both sales and comparable sales to decline in the range of 5-10%.
“Since joining GameStop in April, I have been undertaking a thorough review of the business and working closely with the team to improve our operational and financial performance, address the challenges that have impacted our results, and execute both deliberately and with urgency. We believe we will transform the business and shape the strategy for the GameStop of the future,” said the new CEO George Sherman.
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On June 3, 2019, GameStop’s board of directors decided to eliminate the quarterly dividend, effective immediately, to strengthen the company’s balance sheet and provide increased financial flexibility and optionality. By not paying the dividend, the company expects to preserve about $157 million in cash annually, based on the dividend amount paid in 2018.
GameStop shares, which plunged to a 52-week low ($7.32) last Friday, have dropped 38% since the beginning of this year and 45% in the past 52 weeks.