GameStop tanks after missing on sales and signalling it will close some stores this year

GameStop on Thursday reported fourth-quarter profits that topped analysts’ expectations, but sales that missed forecasts amid weaker demand for its gaming consoles.

In its earnings release, the video-game retailer said its core category was weak, especially in the second half of the year, as the console cycle aged in lieu of new hardware releases. An earlier update on holiday sales showed that top game titles did not sell well in the fourth quarter.

The company said it was hurt by the aggressive Black Friday promotions its competitors had. It expects to close between 2%-3% of its stores worldwide this year, according to the earnings statement.

GameStop reported adjusted earnings per share of $US2.38, topping the forecast for $US2.29 according to Bloomberg. Full-year earnings per share were forecast between $US3.10 and $US3.40, below the consensus for $US3.73.

Comparable sales — at stores open for at least one year — slumped 16.3% in the fourth quarter, not as much as the 17.5% decline that analysts had forecast.

GameStop shares fell by as much as 8% in extended trading after the earnings release. They dropped 22% in the year through Thursday’s market close.

NOW WATCH: 7 mega-billionaires who made a fortune last year

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.