Forecast lowered after GameStop 3Q sales drop

Video game and entertainment retailer GameStop Corp. reported a slight decline in third-quarter earnings as acquisition charges and unfavorable foreign exchange rates dipped into profits.

As a result, the Grapevine-based company cut its earnings forecast for the fourth quarter, citing weakness in consumer spending.

The company now expects to earn from $1.29 to $1.34 per share in the quarter ending Jan. 31, down from its previous forecast of $1.37 to $1.40 per share.

Analysts expect profit of $1.37 per share, according to Thomson Reuters.

For the third quarter ended Nov. 1, the retailer reported net income of $46.7 million, or 28 cents per share, compared to earnings of $52 million, or 31 cents per share for the same period last year.

Excluding items such as merger costs, the company said it would have earned $63.3 million, or 38 cents a share.

Sales grew 6 percent to $1.7 billion for the quarter.

Wall Street, however, was expecting earnings of 37 cents a share on revenue of $1.83 billion, according to consensus estimates from FactSet Research.

Sales of new games such as “Madden NFL 2009” and “Star Wars: The Force Unleashed” drove overall sales 5 percent higher to $1.66 billion from $1.61 billion in the year-ago period.

Same-store sales, which measure sales at stores open at least a year, sunk 1.8 percent from a year ago, when the launch of “Halo 3” boosted results. The company said same-store sales rose 11 percent in October and added 20.5 percent in the first two weeks of November.

“We continue to expect a solid fourth quarter in sales and earnings, albeit tempered slightly by the weakness in consumer spending, based on a line-up of recently released, strong selling new software titles, the drop in hardware prices and the value consumers are placing on video game entertainment,” the company said in a statement.