PC | GameStop profits down 36%

Game retail giant's revenues dip more than 3% to $1.8 billion, profits sink to $39.7 million, projections lowered; VP says Modern Warfare 2 could be best-selling game of all time.

In May, GameStop reported record revenues and boosted profits for its first fiscal quarter, but saw its stock price suffer after it lowered its expectations for the full year. Today, the specialty retailer posted its second quarter figures and significantly lowered expectations once again, but this time without the record revenue and profits.

Tough times in Grapevine, TX.

For the quarter ended August 1, GameStop posted revenues of $1.74 billion, down more than 3 percent year-over-year from $1.8 billion. Meanwhile, net profits sank 36 percent to $39.69 million from its 2008 second quarter haul of $57.16 million. The company attributed the slip to sluggish hardware sales, a lack of compelling new titles, and thriftier customers in a tough economy.

Looking ahead to the rest of the company's fiscal year, GameStop again backed off its public projections. Originally, the company projected its full-year comparable store sales to be up between 4 and 6 percent. It reduced that expectation in May, saying same-store sales would be instead be flat year-over-year. Today's revision pegs comparable store sales for the year to be down 4 to 8 percent, thanks to ongoing economic concerns and delays to such titles as BioShock 2, Starcraft II, and Splinter Cell: Conviction.

In a post-earnings conference call, GameStop executive vice president of merchandising and marketing Tony Bartel said there would still be some heavy hitters driving sales this year. For example, he said that Call of Duty: Modern Warfare 2 "has a chance to be the best-selling title of all time," based on the preorder activity it has generated at GameStop stores. The Infinity Ward shooter's "Prestige Edition"--a $150 bundle, including working night-vision goggles--has seen particularly strong preorders, Bartel said. He added that it has driven many customers to upgrade their reservations from the standard edition, "which is a very good sign."

The results once again battered GameStop stock, as shares of the retailer had lost $1.38 as of press time, trading down more than 5 percent to $23.80.

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