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GameStop’s Shares Tumble on Disappointing Profit

August 24, 2017, 9:00 PM UTC

GameStop, the world’s largest video game and gaming console retailer, reported a quarterly profit that narrowly missed analysts’ estimates as fewer customers shopped for video games at its stores.

Shares of the company (GME) fell 7.6% to $20.13 after the bell on Thursday.

Although the popularity of Nintendo Switch helped drive console sales at its stores, the growing popularity of downloading games from websites took a toll on its mainstay video game retail business.

Sales in its video game retail business dropped 3.4% to $369.3 million in the second quarter ended July 29, while hardware business recorded a 14.8% jump in sales to $248.4 million.

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To offset the decline in video game sales at its outlets, the company has been trying to beef up its technology brands business, which includes AT&T and Apple authorized retail stores.

Sales in GameStop’s technology brands unit rose 7% to $188.3 million, accounting for about 11.2% of its total revenue.

The company’s net income fell to $22.2 million, or 22 cents per share, in the second quarter ended July 29 from $27.9 million, or 27 cents per share, a year earlier.

Excluding items, GameStop earned 15 cents per share.

Net sales rose 3.4% to $1.69 billion.

Analysts on average had expected the company to report a profit of 16 cents per share and revenue of $1.64 billion, according to Thomson Reuters I/B/E/S.