GameStop Corp said on Thursday its same-store sales dropped more than expected in the last quarter and it lowered its full-year same-store sales forecast.

Shares in the video game retailer fell by as much as 17 percent in midday trading after forecasting another weak quarter of same-store sales, a measure of stores open at least a year.

The real damage here is in the guidance, said Mike Hickey analyst at Janco Partners.

Fiscal first quarter net income was $70.4 million, or 42 cents a share, up from $62.1 million, or 37 cents a share, a year earlier.

Sales rose 9.2 percent to $1.98 billion, the Grapevine, Texas-based company said.

Analysts had been expecting a profit of 42 cents a share, on revenue of $1.99 billion, according to Reuters Estimates

But comparable store sales - sales at stores open at least a year - missed its own forecast, declining 1.5 percent, due to the recession in Europe and a slowdown of new console sales that occurred late in the quarter.

GameStop reiterated last month that first quarter same-store sales would come in flat to up 2 percent.

The stock is down because of the surprise decline after they reiterated their guidance with two weeks of the quarter left, said Hickey.

The company said it expects to earn between 28 cents to 33 cents a share in the its fiscal second quarter. Wall Street had been expecting profit to come in around 40 cents.

GameStop also expects same store sales to decline by 8 percent to 11 percent in its second quarter. Janco Partners had been expecting a decline of 4 percent.

Though the company reiterated its full year diluted earnings range of $2.83 to $2.93, it lowered its full-year same store sales forecast to range from flat to up 2 percent down from a previous forecast of 4 percent to 6 percent.

The real kicker here is Q2 being so weak from a guidance perspective and that's due to slowing hardware sales which have a disproportionate negative impact on same store sales numbers, said Hickey.

GameStop has previously been able to maintain growth despite the economic downturn, as sales of video game consoles by Nintendo <7974.OS>, Sony Corp <6758.T> and Microsoft remained robust, driving consumers into GameStop stores games to buy software for their systems.

Analysts said the recession has meant consumers are buying fewer games consoles such as Sony's PlayStation 3 until there are significant price cuts.

The company's profit margins have benefited from an active trade-in system, where shoppers return used games for a fraction of the purchase price or credit toward future sales. The returned games are sold at a higher profit margin than new games.

Shares in GameStop were down $3.69 to $22.78 on the New York Stock Exchange.

(Reporting by Yinka Adegoke and Franklin Paul; Editing by Derek Caney)