Wal-Mart to Offer Used Games, GameStop’s Outlook Cloudy

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Source: Thinkstock

Source: Thinkstock

Before the market open on Thursday, March 27, GameStop (NYSE:GME) will report fiscal Q4:13 (ending February 1) results, and will host a call at 8 a.m. PT (dial: 888-211-9951888-211-9951, passcode: 7583159, webcast: http://invest r.gamestop.com).

We expect Q4 results at or above the high end of guidance. We expect revenue of $3.85 billion, comps of up 10.2 percent, and EPS of $1.97 versus consensus of $3.79 billion and $1.93 guidance for comps of up 2 – 9 percent and EPS of $1.85 – 1.95. Management updated guidance on January 14 and has generally adopted aconservative approach to guidance. Given strong next-gen demand and a large amount remaining under the company’s share repurchase authorization, we are confident GameStop can deliver results at or above the high-end of guidance.

We expect conservative FY:14 guidance. We expect management to guide to EPS growth of 10 – 20 percent year-over-year, implying a range of $3.37 – 3.67. We expect apositive high-single-digit comps guidance range, reflecting solid sales of the two next-generation consoles, and expect actual FY:14 results to exceed initial guidance. For FY:07, the second full year of the current-gen cycle, GameStop initially guided to EPS of $1.37 – 1.40 and comps of up 14 – 16 percent, and delivered full-year EPS of $1.75 and comps of up 24.7 percent.

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