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GameStop Corp.’s power boost from the Nintendo Switch was all too fleeting. Nintendo Co.’s hot new console helped the biggest stand-alone video-game retailer in the US beat analysts’ estimates for first-quarter results. But GameStop kept its forecast for the year the same, saying its inventory of Switch is too hard to predict. That, plus a delay in the release of Take-Two Interactive Software Inc.’s Western shoot-em-up Red Dead Redemption 2, put a damper on GameStop’s outlook.
Gamestop shares fell as much as 10 percent to $21.25. Before Friday, the stock had already tumbled 21 percent in the previous 12 months. GameStop has been coping with a dramatic shift in its core business, as consumers buy more games directly from publishers through consoles from Sony Corp. and Microsoft Corp. The company has sought to diversify in recent years, focusing on toys and collectibles, online sales and AT&T-branded wireless stores.
The GameStop results followed better-than-expected sales reports from competitors Best Buy Co. and Target Corp., which both cited strong performance in the video-game category. The Switch console, released on March 3, can be attached to a TV or played like a handheld device, and Nintendo is promising a slate of games like Splatoon 2 and Super Mario Odyssey to keep fans engaged.
In the first quarter, Grapevine, Texas-based GameStop earned 63 cents a share excluding some items, ahead of the 51-cent average of analysts’ estimates. Sales grew to $2.05 billion, ahead of the projected $1.94 billion.