Aug 31 (Reuters) – GameStop said on Monday it expects second-quarter net sales to decline due to planned store closures and the sale of its France operations.
The videogame retailer expects quarterly net sales in the range of $780 million to $800 million on a preliminary basis, compared with $972.2 million reported a year ago.
Still, GameStop’s shares rallied 5% in premarket trading after the company said it would pay about 27% of a previously announced $1.4 billion debt exchange through cash on hand instead of issuing new stock. That would prevent shareholders from suffering more dilution.
GameStop has been pursuing a high-profile takeover of the much larger eBay and has built a nearly 10% stake in the online auction site even after suffering a rejection in May. Bloomberg News reported earlier this month it could pull the bid and instead focus on a partnership or venture with the e-commerce company.
While the takeover proposal attracted significant attention on Wall Street and among retail investors, it drew widespread skepticism from analysts, who questioned how GameStop would finance the acquisition and highlighted the limited overlap between the companies’ core businesses.
GameStop said it expects cash, cash equivalents and marketable securities to be in the range of $5.05 billion to $5.07 billion, compared with $8.69 billion at the close of the prior year’s second quarter.
It expects quarterly net income between $290 million and $310 million, versus $168.6 million reported a year earlier.
Net income for the quarter includes about $238 million in net gains stemming from the eBay derivative asset and equity investment, partially offset by a loss of roughly $75 million on digital assets and related receivables.
GameStop, which has shifted focus from traditional hardware sales toward trading cards and collectibles, is scheduled to report its second-quarter results on September 8.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel)
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