(Reuters) - GameStop Corp, the world’s largest retailer of video games, forecast lower-than-expected revenue and profit for the current quarter, blaming a lack of blockbuster game launches.
The company’s shares fell as much as 10.8 percent to $26.75 in after-hours trading on Thursday.
“We expect June and July to reflect an industry decline, coming off of Batman and Elder Scrolls in June last year and Rory McIlroy PGA Tour in July,” Chief Financial Officer Robert Lloyd said on a conference call with analysts.
The company benefited from strong sales of “Batman: Arkham Knight” and “The Witcher 3: Wild Hunt” games in the year-ago second quarter.
Sales in the company’s physical gaming business have been languishing as videogame publishers push consumers to buy games directly on their videogame consoles instead of at stores.
Sales from new video game hardware business fell 28.8 percent to $312.9 million in the first quarter.
The company forecast second-quarter revenue to fall 1-4 percent, representing $1.69 billion-$1.74 billion, and profit of 23-30 cents per share.
Analysts on average were expecting revenue of $1.80 billion and profit of 33 cents, according to Thomson Reuters I/B/E/S.
“The market doesn’t like the Q2 guidance, which calls for another negative comp when the game lineup looks pretty comparable to last year‘s,” said Wedbush Securities analyst Michael Pachter, adding “Doom” and “Overwatch” could be compared with year-earlier launches.
Activision Blizzard Inc’s “Overwatch” and Bethesda Softworks’ “Doom” were launched this month.
GameStop is expanding its technology brands businesses, which sells cellphones and consumer electronics, to counter falling sales in its physical gaming business.
Revenue in the technology brands business, which include stores such as Spring Mobile and Simply Mac, jumped 62.2 percent to $165.8 million in the three months ended April 30.
The company’s net income fell to $65.8 million, or 63 cents per share, from $73.8 million, or 68 cents per share, a year earlier.
Excluding items, the company earned 66 cents per share, beating the average analyst estimate of 62 cents.
Total revenue fell 4.3 percent to $1.97 billion, but was in-line with analysts’ average estimate.
The company’s shares recouped some of their losses and were down 7.4 percent at $27.74 in after-market trading.
Up to Thursday’s close, the stock had risen about 7 percent this year.
Reporting by Kshitiz Goliya in Bengaluru; Editing by Maju Samuel