It isn't easy being in the video game business these days.
Sales tracker NPD Group is out with its monthly industry report, and it's not pretty. New video game sales plunged a whopping 42% last month. A lack of new releases when the industry is pitted against last April's slate is the major culprit, but is a void of marquee titles a crutch or a symptom? Hardware sales fell by an equally problematic 32%.
Accessory sales held steady, but it all adds up to an overall 32% decline.
That figure doesn't include digital sales and the thriving resale market pioneered by GameStop (NYS: GME) , but the trend is unmistakably negative.
Hoping to distance itself from the negativity behind the NPD data, GameStop preannounced some tidbits from the quarterly report that it will make public next week.
Same-store sales fell 12.5% during the quarter, and its earnings of $0.54 a share -- while below last year's $0.56-a-share showing -- is just ahead of the $0.53 a share that analysts were projecting.
The company is also reaffirming its full-year bottom-line guidance -- but cool it on the high-fives, GameStop bulls. GameStop's reaffirmations have been dubious over the past year. The company doesn't provide income guidance; it only offers that up on a per-share basis. The retailer has been aggressively repurchasing its stock, and that has allowed it to stick to its guidance, even as it hoses down its store-level sales guidance.
Doesn't anyone remember when GameStop was expecting comps to decline by no more than 9% for the quarter back in March? This is a company that has mastered the art of slashing its same-store sales target several times over the past year, while buying back enough shares so it doesn't come undone on the bottom line.
The silver lining here is that Activision Blizzard (NAS: ATVI) will hit stores on Tuesday with Diablo III. Max Payne 3 -- another of Take-Two's delayed games -- finally hits stores next week as well.
Amazon.com (NAS: AMZN) revealed yesterday that Diablo III has become the online retailer's most pre-ordered PC game of all time. Sure, there's a major distinction between a PC game and a console title, but it's welcome news all the same.
Then again, if GameStop doesn't offer up a matching announcement on its end, is it time to worry that sales continue to migrate to the cheaper and nimbler e-tailers?
Don't let die-hard gamers down, May.
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At the time thisarticle was published The Motley Fool owns shares of GameStop. The Fool owns shares of and has written calls on Activision Blizzard.Motley Fool newsletter serviceshave recommended buying shares of Activision Blizzard and Take-Two Interactive Software.Motley Fool newsletter serviceshave recommended creating a synthetic long position in Activision Blizzard.Motley Fool newsletter serviceshave recommended writing covered calls on GameStop. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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