GRAPEVINE, Texas (AP) — GameStop, the world's biggest video game retailer, reported a 32 percent decline in its second-quarter net income on Thursday as sales slowed because not enough new games came out to draw in customers.
The company also said Thursday that it is testing to see if it needs to write down the value of its good will because the value it's carrying on its books exceeds the company's market capitalization.
For the period ended July 28, GameStop earned $21 million, or 16 cents per share. That's down from $30.9 million, or 22 cents per share, a year earlier.
But the performance managed to meet the expectations of analysts polled by FactSet.
Revenue fell 11 percent to $1.55 billion from $1.74 billion, falling short of Wall Street's $1.61 billion estimate.
Revenue at stores open at least a year, a key measure of a retailer's health, dropped 9.3 percent. This metric excludes results from stores recently opened or closed.
Sales of used items fell 11.2 percent. Mobile sales, which includes tablets and pre-owned iDevice products, totaled $29 million in the quarter, keeping GameStop on pace with its full-year forecast for mobile sales of $150 million to $200 million.
The Grapevine, Texas company said that if it takes an impairment charge as a result of the test it is performing, the charge would be material to its financial statements but would not impact its ongoing operations, cash flows or financial condition.
Looking ahead, GameStop still expects full-year earnings of $3.10 to $3.30 per share, with revenue at stores open at least a year down 2 percent to 10 percent.
Analysts expect earnings of $3.13 per share.
For the third quarter, GameStop Corp. predicts earnings of 28 cents to 36 cents per share. It anticipates a 5 percent to 10 percent decline in revenue at stores open at least a year.
Wall Street foresees earnings of 40 cents per share.
GameStop has 6,628 company-run stores in 15 countries. Its stock added 20 cents to $17.25 in morning trading.