GameStop Posts Disappointing Profit, Adding Pressure to Do Deal

(Bloomberg) -- GameStop Corp. declined after posting disappointing second-quarter earnings, putting pressure on the beleaguered video-game retailer's management as it weighs a possible sale.

Key Takeaways

• The weak results potentially make it more desirable for GameStop to do a deal, though that's been far from a sure thing in recent months.
• GameStop confirmed in its report that it “continues to engage with third parties regarding a possible transaction” and is working with financial adviser Perella Weinberg Partners LP.
• DealReporter said earlier this week that private equity firms Sycamore Partners and Apollo Global Management are GameStop's two main suitors.
• In the meantime, GameStop expects comparable sales this year to range between a flat performance and a decline of 5 percent.

Market Reaction

• The stock tumbled as much as 6 percent to $15.17 in extended trading. The shares were already down 10 percent this year.

Raw Numbers

2Q adjusted EPS 5c, estimate 8c (range 1c to 16c) (Bloomberg data) Sees FY comparable sales -5% to 0% Sees FY adjusted EPS $3.00 to $3.35, estimate $3.09 (range $2.87 to $3.37) (BD) 2Q comparable sales -0.5%, estimate -3.1% (Consensus Metrix, average of 9 estimates) 2Q net sales $1.65 billion, estimate $1.61 billion (range $1.57 billion to $1.69 billion) (BD) 2Q new hardware sales +20.1% 2Q new software sales -18.5% Reaffirms Fiscal 2018 Guidance Continues Talks With 3rd Parties on Possible Deal

To contact the reporters on this story: Nick Turner in Los Angeles at nturner7@bloomberg.net;Melodie Warner in New York at mwarner19@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

©2018 Bloomberg L.P.

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