(Reuters) - GameStop Corp on Tuesday halted its quarterly dividend after reporting a 13.3% fall in first-quarter revenue that missed analysts' estimates, hurt by slowing sales of video games and consoles at its stores.
Shares of the company fell 10% to $7.04 in extended trading.
The stoppage of dividend will save about $157 million per annum, besides helping in cutting its nearly $500 million debt burden.
"The stock is down because they eliminated the dividend. It was a 20% yield, so I'm surprised the stock isn't down more," Wedbush Securities analyst Michael Pachter said.
The gaming retailer has been struggling with shrinking profits as consumers shift to downloadable videogames instead of buying physical versions from stores.
GameStop also faces a major threat from the rising advent of game streaming, with technology giants like Alphabet Inc's Google, Microsoft and others getting into the still nascent space.
New hardware sales plunged 35%, with an increase in Nintendo Switch sales more than offset by a decline in Microsoft Corp's Xbox One and Sony Corp's PlayStation 4 console sales, GameStop said.
The company forecast comparable sales for the full-year to fall between 5% and 10%, while analysts were expecting a 4.9% drop in same-store sales.
GameStop, which saw several changes in management since Chief Executive Officer J. Paul Raines passed away last March, has been cutting costs to remodel itself in the face of a changing retail landscape.
Two months ago, the company named retail industry veteran George Sherman as chief executive officer, its fifth CEO in just over a year, and it named James Bell as its chief financial officer last week.
"I have been undertaking a thorough review of the business and working closely with the team to improve our operational and financial performance, address the challenges that have impacted our results and execute both deliberately and with urgency," Sherman said in a statement.
Sales of pre-owned products fell 20.3% to $395.3 million in the first quarter, while sales from its collectibles business rose 10.5% to $157.3 million.
GameStop's net income fell to $6.8 million, or 7 cents per share, in the quarter ended May 4, from $28.2 million, or 28 cents per share, a year earlier.
Net sales declined to $1.55 billion from $1.79 billion.
Analysts on average had expected a loss of 3 cents per share on revenue of $1.64 billion, according to IBES data from Refinitiv.
(Reporting by Supantha Mukherjee and Arjun Panchadar in Bengaluru; Editing by James Emmanuel)
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Updated Date: Jun 05, 2019 05:05:51 IST