Gamestop got b*tched slapped by Walmart

[Nargrakhan]

From various feeds…

By Adam Satariano and James Callan

Jan. 7 (Bloomberg) – GameStop Corp., the world’s largest video-game retailer, declined the most in seven years after fourth-quarter earnings fell short of estimates because of disappointing holiday sales.

GameStop fell $3.37, or 14 percent, to $20.66 at 2:39 p.m. in New York Stock Exchange composite trading, after dropping as much as 19 percent, the biggest intraday decline since Dec. 19, 2002. The stock gained 1.3 percent last year.

Promotional offers from rival retailers, including a $50 discount on Nintendo Co.'s top-selling Wii console from Wal-Mart Stores Inc., caused the game seller to lose customers, said Arvind Bhatia, an analyst with Sterne Agee & Leach Inc. based in Dallas. Comparable-store sales fell 8.6 percent during the nine- week holiday period ended Jan. 2, Gamestop said.

“Walmart and other retailers were much more aggressive this holiday season than they were in the past,” said Bhatia, who recommends buying GameStop shares. He estimated Walmart, the world’s largest retailer, lost $30 on each Wii sale as a result of the promotion, an offer GameStop didn’t match.

Melissa O’Brien, a Walmart spokeswoman in Bentonville, Arkansas, didn’t immediately reply to an e-mail seeking comment.

GameStop’s profit probably dropped to $1.25 to $1.29 a share in the quarter ended Jan. 2, the Grapevine, Texas-based retailer said today in a statement. The company forecast earnings of $1.47 to $1.65 a share in November. Analysts projected $1.58, the average of 18 estimates in a survey.

Shortages of Products

The company expects full-year earnings of $2.23 to $2.27 a share, down from a November forecast of $2.45 to $2.63. Analysts projected $2.56 on average.

Chief Executive Officer Daniel DeMatteo said the company has almost $700 million in cash and is considering a stock buyback or dividend.

“We’re looking at giving some back to shareholders in some fashion,” DeMatteo said today in an interview. The decision requires approval from the company’s board of directors and he hopes to make an announcement “sooner than later.”

GameStop said holiday sales were impacted by “economic weakness,” winter storms at peak shopping periods in December, and unexpected shortages of products such as New Super Mario Bros. Wii and the PlayStation 3. International sales were especially weak, DeMatteo said.

“The macroeconomic environment put a damper on people buying as many video-games as we expected,” DeMatteo said.

¬ëOut of Stock’

Excluding purchases of about 10 top-selling games, sales were disappointing, DeMatteo said. Nintendo and Sony couldn’t keep up with demand for consoles, he said.

“They were out of stock right before Christmas,” DeMatteo said of Sony’s PS3.

Sony said yesterday that holiday sales of the PlayStation 3 rose 76 percent, exceeding 3.8 million units worldwide in the five weeks leading to the end of the year. Nintendo said this week that U.S. sales of the Wii climbed 40 percent to 3.1 million units.

In the holiday period, hardware revenue at GameStop dropped 8 percent partly because of console price cuts on Sony Corp.'s PlayStation 3, Microsoft Corp.'s Xbox 360 and Nintendo’s Wii.

New video-game software sales rose 4 percent in the holiday period, spurred by demand for Activision Blizzard Inc.'s “Call of Duty: Modern Warfare 2” and Ubisoft Entertainment SA’s “Assassin’s Creed II,” according to the statement.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net;

Maybe if Gamestop actually had good deals on new stuff - and not used or garbage titles - people would actually buy from them.

[Kabraxal]

I never buy games or systems from Walmart. Bestbuy or Gamestop for the systems (have had to use both companies protection plans and have had no issues) and primarily Gamestop for the games.

In the end though I don’t think Walmart will truly threaten Gamestop (for gamers). Gamestop is really only rivalled by Amazon due to selling used games and having better guarantee programs for them. But then I really don’t care for Walmart, so my views might be coloured with intense bias.

[Nargrakhan]

When Stateside, I buy all my games from Bestbuy.

Online I go through Amazon or Ebay.

[Vardest]

I’ve got to say that I also prefer Bestbuy, although the PX was nice while I was still in the service. When I’m going to buy something from a store I prefer to be able to just grab it and take it to the counter rather than having to ask if it’s in stock, being asked if I preordered, and then waiting on them to find it.

[Kabraxal]

Since some of my tastes run to the niche RPG market, Bestbuy isn’t always the best option. Almost any NIS or Atlus title is easier to find at Gamestop.

Also, I prefer my Gamestop here just because I know and get along with the current staff. That is a huge plus.

[Billybob]

@Vardest

I’ve got to say that I also prefer Bestbuy, although the PX was nice while I was still in the service. When I’m going to buy something from a store I prefer to be able to just grab it and take it to the counter rather than having to ask if it’s in stock, being asked if I preordered, and then waiting on them to find it.

Oh man, I used to love the PX. Not the best selection, true, but the price was always right, plus no sales tax!

[DarkFusion]

I only go to Gamestop if I’m looking for older games, and that’s if I can’t find it on Amazon. The store I usually get my games from is Fry’s

[RonXE]

I ususally buy many games from Best Buy, Gamestop, J&R Music World, Toys R Us, and three import video game stores (also sell American games) in Chinatown, NYC. Also, online for Amazon. Walmart is not locating in Manhattan, yet.

[Doug]

If I have to have a game the day it comes out,or has some sweet preorder item with it, or I can afford it, (I’m looking at you Mass Effect 2) I’ll preorder through Gamestop and have it delivered directly to my door. Otherwise I’ll go to BestBuy.

[sanahtlig]

I get almost all of my games through Amazon. No sales tax, and the shipping is usually free. There’s just no reason to go to a brick-and-mortar shop, unless you suddenly find yourself out of games–and with proper planning, that shouldn’t happen. Amazon can suck for preorders though–I’ve waited for a week after release in one case (choosing the free shipping option). If I really want a preorder on time, I’ll order through Gamestop, as they’ve never failed me.

[papillon]

When stateside, I go to Gamestop, but I generally end up rolling my eyes at how crazily high-priced their used games are. If the used price is only a few bucks less than new, that’s insane to me both as a player AND a developer. (Also, I tend to be hunting for things that are deeply flawed and unpopular, searching for overlooked quality, stealable elements, or at least some laugh value. Which means that if it costs more than $10 I probably won’t buy it!)

I tend to find better deals on NEW stuff shops have had kicking around for ages and been unable to offload.

But the point of going to a shop, for me, is finding stuff I didn’t know I wanted (at a decent price). If I actually want a particular game I’ll probably order it on Amazon (or Ebay).

[Jinnai]

@Dark_Shiki

I get almost all of my games through Amazon. No sales tax, and the shipping is usually free. There’s just no reason to go to a brick-and-mortar shop, unless you suddenly find yourself out of games–and with proper planning, that shouldn’t happen. Amazon can suck for preorders though–I’ve waited for a week after release in one case (choosing the free shipping option). If I really want a preorder on time, I’ll order through Gamestop, as they’ve never failed me.

That’s why i go with Gamestop - preorders. And I only preorder stuff with extras.

[Nandemonai]

I tried to maintain loyalty to GameStop, because really, if the dedicated game stores go under, it will be really hard to find niche stuff like Atlus. But GameStop makes it real hard when I can’t just walk into a store on release day and buy it - no, they tell me I “should have” preordered it. Bullshift - you should stock the new games. You are a games specialty retailer who can’t be arsed to stock your own product? If I can’t get a new game in the store the week it comes out because you didn’t buy any copies, then the chain has basically no reason to be there. The advantage of specialty retailers like this is stuff like better selection. Deliberately throwing that away is not a good idea.

[Billybob]

I shop Gamestop from time to time, but a lot of times I just use amazon.com. I have to get off my ass enough to go to work, when I’m not at work, I like to be lazy, so small electronics and books are all mostly online orders for me these days.