Don’t count GameStop (NYSE:GME) out just yet.
That’s the message from the company’s CEO, who appeared on FOX Business Network's Varney & Co. Monday morning.
GameStop reported quarterly earnings last week that showed revenue, which rose 1.4% to $3.53 billion, missed expectations of $3.57 million. Net income, meanwhile, rose to $2.36 a share during the reporting period, from $2.23 during the same period in the prior year.
In forward guidance issued on Thursday, the company said it expects first-quarter revenue below expectations thanks to a lack of big-name videogame releases and weaker hardware sales. Further, total sales are expected to fall between 4% and 7%, well below expectations.
Shares plunged more than 8% ahead of the bell after guidance before rallying more than 1% in midday action.
CEO Paul Raines explained that while GameStop made its name as a bricks-and-mortar destination for video-game lovers, it’s evolved as more gamers flock to online offerings.
“We did over a billion dollars in digital revenues last year with our customers. We’re up 16% on digital receipts, so we understand that trend and of course, video gaming has always been cyclical and that’s why you’ve seen us trying to develop new businesses,” he said.
As the company invests more heavily in those businesses, he said the company will become a “dominant player” in virtual reality, but declined to say how it will impact GameStop’s bottom line.
“We have not put that into our forecast in any significant way. Part of that is because we have to wait on our publishing partners to make their announcements at E3 coming up in June. But virtual reality will be a very significant part of the future,” Raines said.
Rains comments come the day after Oculus founder Palmer Luckey delivered the first consumer version of the company’s virtual reality headset, Rift, to a customer in Ancorage, Alaska.
The retail version of the Rift began shipping to consumers Monday.