Gamestop Corp. (NYSE:GME) dropped 8% Thursday despite reporting an improved second- quarter profit, driven by high demand for new video games, which led the company to raise its full-year outlook, though earnings missed estimates, causing shares to plunge.
The company posted net income of $40.3 million, or 26 cents a share, compared with $38.7 million, or 23 cents a share, in the same quarter last year, and narrowly missing average analyst estimates of 27 cents, according to a Thomson Reuters poll.
Revenue for the video game retailer was $1.8 billion, up 3.4% from $1.74 billion a year ago, and down slightly from average analyst estimates of $1.82 billion, according to a Thomson Reuters poll.
Gamestop CEO J. Paul Raines said the results demonstrated the “resiliency” of the company's business model, as it achieved "top-line and earnings growth" despite the ongoing volatility in the global economy.
Earnings were boosted by a 5.3% increase in new video game software sales and high demand for Rockstar Games’ Red Dead Redemption, Nintendo’s Super Mario Galaxy 2, THQ’s UFC Undisputed 2010, Blizzard Entertainment’s StarCraft II Wings of Liberty, and EA Sports’ NCAA Football 11.
The company, which is launching its PowerUp Rewards loyalty program and in-store DLC sales pilot in the third quarter, improved its full year earnings outlook to the range of $2.58 to $2.68 a share.