GameStop Corp. Earnings Cheat Sheet: Streak of Four Straight Profit Rises Snapped

S&P 500 (NYSE:SPY) component GameStop Corp. (NYSE:GME) reported its results for the second quarter. GameStop Corp. operates as a retailer of video game products and PC entertainment software. It sells video game hardware, software and accessories, and PC entertainment software.

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GameStop Corp Earnings Cheat Sheet for the Second Quarter

Results: Net income for the electronics store fell to $30.9 million (22 cents per share) vs. $40.3 million (26 cents per share) a year earlier. This is a decline of 23.4% from the year earlier quarter.

Revenue: Fell 3.1% to $1.74 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: GME beat the mean analyst estimate of 21 cents per share. It fell short of the average revenue estimate of $1.84 billion.

Quoting Management: Paul Raines, chief executive officer, stated, “GameStop’s resilient retail model enabled us to achieve our earnings plan despite a challenging period for the industry. Through the back half of the year, we expect industry software sales to accelerate based on an exciting title line-up. Meanwhile, the digital and loyalty programs we have brought to market continue to gain traction with consumers and position us as a leading partner with publishers.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the first quarter, net income rose 7% from the year earlier, while the figure increased 10.1% in the fourth quarter of the last fiscal year, 4.8% in the third quarter of the last fiscal year and 4.3% in the second quarter of the last fiscal year.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the first quarter, which saw revenue rise 9.5%.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of 56 cents versus a mean estimate of net income of 54 cents per share.

Gross margins expanded last quarter, rising 2.4 percentage points to 31.2% from the year earlier quarter. This snaps a streak of two consecutive quarters of shrinking margins.

Competitors to Watch: Best Buy Co., Inc. (NYSE:BBY), RadioShack Corporation (NYSE:RSH), CONN’S, Inc. (NASDAQ:CONN), hhgregg, Inc. (NYSE:HGG), Rent-A-Center, Inc (NASDAQ:RCII), Amazon.com (NASDAQ:AMZN), eBay (NASDAQ:EBAY), Wal-Mart (NYSE:WMT) and Target (NYSE:TGT).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

(Source: Xignite Financials)