GameStop, the world's largest video game and gaming console retailer, reported a quarterly profit that narrowly missed estimates as growth in the company's technology brands business failed to live up to market expectations.
Shares of the company fell 7.6% to $20.13 after the bell yesterday.
The company has been beefing up its technology brands unit, which includes AT&T and Apple authorised retail stores, to offset declines in video game sales at its outlets.
Although sales in the unit rose 7% to $188.3m, they were still short of analysts' estimates of $207.6m, according to financial data and analytics firm FactSet.
The business accounts for about 11.2% of its total revenue.
"The (No 1) takeaway is that the Tech Brands business is a disaster, with sales per store down over $30,000 for the quarter and with very low profitability," Wedbush Securities analyst Michael Pachter said.
However, Chief Financial Officer Robert Lloyd told Reuters that the much-awaited launch of new iPhones and the deal between AT&T and Time Warner would help the business in the near-term.
"The deal between AT&T and Time Warner will give us new products and services to offer in our stores," Mr Lloyd said.
GameStop operates 1,403 AT&T branded wireless retail stores under Spring Mobile and 50 Simply Mac branded stores, which sell Apple products.
Sales in GameStop's pre-owned video games business, accounting for about a third of its overall sales, fell 7.5% to $501.8m - their biggest drop in six quarters.
Sales of new computer games at its stores also slipped 3.4% to $369.3m in the second quarter ended 29 July.
However, the continuing popularity of Nintendo Switch gaming console helped shore up sales in its new hardware business, which reported a 14.8% jump in revenue to $248.4m.
The company's net income fell to $22.2m, or 22 cents per share, in the second quarter from $27.9m, 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.
