This time last year, GameStop was riding high on holiday sales that were up 22 percent year-over-year. Not so for the start of 2010. The game retailer said 2009 holiday sales reached $2.86 billion — meaning no growth vs. 2008. And while it said new stores showed strong performance, same-store sales slumped by 8.6 percent.
GameStop lowered its Q409 guidance as a result. It now expects EPS for the quarter to range from $1.25 to $1.29 — well below the Q408 EPS of $1.39. Investors hammered its stock as a result, with shares down by more than 15 percent well before market close.
In a statement, the company offered up a few key reasons for the flat holiday sales: “economic weakness” in all the regions it operates in, “winter storms at peak shopping periods in December,” and “unexpected shortages” of coveted products like new Super Mario Bros. game for the Wii, the Wii itself, and the PS3.
But analysts like Broadpoint AmTech’s Ben Schachter pose another suggestion: That GameStop is actually starting to feel some pressure from challengers like Wal-mart and Amazon (NSDQ: AMZN) — particularly since it says hardware (console) sales were down 8 percent — and the console-makers are actually reporting big gains.
“The way we see it, [GameStop] either lost meaningful share to [Wal-mart] and the online channels (primarily Amazon) or something does not add up from the first-party announcements,” Schachter said, in a research note.
Lazard Capital’s Colin Sebastian had similar sentiments: “Due to competitor promotions such as Wal-Mart