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Assassin's Creed Unity Delay Hurts GameStop's Revenue

Flagging videogame software sales more than offset high demand for PlayStation 4 and Xbox One consoles.

Reuters / Rick Wilking

GameStop reported quarterly revenue and profit well below analysts’ estimates as the delayed release of Assassin’s Creed Unity and flagging videogame software sales more than offset high demand for PlayStation 4 and Xbox One consoles.

Shares of the world’s largest retailer of video game products fell 11 percent in extended trading after the company also lowered the upper end of its full-year profit forecast.

Release of Assassin’s Creed Unity, developed by France’s Ubisoft Entertainment, was pushed by about two weeks to make minor improvements, and it hit stores in North America only on Nov. 11.

GameStop said it expected fiscal 2014 diluted earnings of $3.40-$3.55 per share, compared to its earlier forecast of $3.40-$3.70.

Sales of new game software fell 34.4 percent in the quarter.

Games launched in October sold 42 percent fewer units, compared with a year earlier, market research firm NPD said in an email.

Sales of new hardware jumped 147.4 percent, driven by robust demand for Sony’s PlayStation 4 and Microsoft’s Xbox One.

“These consoles have had a great start as cumulative sales are currently over 70 percent higher than the combined first year totals of Xbox 360 and PS3,” the NDP report said.

GameStop’s net income dropped to $56.4 million, or 50 cents per share, in the third quarter, ended Nov. 1, from $68.6 million, or 58 cents per share, a year earlier.

Adjusted for the deferral of digital revenue and other items, the company earned 57 cents per share.

The Grapevine, Texas-based company said total revenue fell to $2.09 billion from $2.11 billion.

Analysts on average had expected revenue of $2.2 billion and profit of 61 cents per share, according to Thomson Reuters I/B/E/S.

The company’s shares closed at $43.87 on the New York Stock Exchange on Thursday.

(Reporting by Abhirup Roy in Bangalore and and Malathi Nayak in San Francisco; Editing by Sriraj Kalluvila)

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