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GameStop Says October New Releases Underperformed

3 Nov, 2016 By: Erik Gruenwedel

GameStop said new video games released in October failed to meet expectations, and would contribute to a 6% to 7% decline in same-store sales for the third-quarter (ended Oct. 31) fiscal period.

High-profile releases included EA’s Battlefield 1 and Titanfall 2, Microsoft’s Gears of War 4 and Take-Two’s Mafia III.

The nation’s largest video game retailer said that due to the weaker-than-expected results, it would revise its full-year outlook. It now expects comparable store sales to decline from 9.5% to 6.5%.

“Our expectation was that the new titles … would provide a catalyst for new software sales. While the technology brands and collectibles segments continue to grow rapidly, they will not offset the decline in gaming this quarter,” CEO Paul Raines said in a statement.

Raines said he remains upbeat on improvements in virtual reality, rollout of the Sony PlayStation 4 Pro, Nintendo Switch and Microsoft Scorpio going forward.

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, said lower shipments of PlayStation VR and price cuts to PS4 and Xbox One S put downward pressure on GameStop revenue. He said that with the winter retail period approaching, consumers have delayed purchasing games, with some opting for e-commerce, including Amazon Prime discounts.

“We believe that physical sales represent a majority (but only a portion) of total industry sales (physical and digital); it appears that the migration toward digital full game downloads has absorbed modest growth in overall industry sales, overwhelming any strides that GameStop makes on the declining physical front,” Pachter wrote in a note.

GameStop reports complete Q3 results Nov. 22.

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