2012 'challenging' for console gaming, says GameStop

Retailer says past year was tough due to longevity of current console cycle; fourth-quarter, full-year sales down.

GameStop today reported its fourth-quarter and full-year 2012 financial results, calling the year tough, but noting the launch of new consoles and further investment in digital sectors should help turn things around at the retailer.

"While 2012 was a challenging year for console gaming, we focused on factors within our control," GameStop CEO Paul Raines said in a statement. "We expanded our market leadership position, maintained our financial strength, and controlled our spending. Perhaps most importantly, we invested in our mobile and digital businesses to position the company for future success. These channels delivered as planned and significantly contributed to our highest ever gross margin and profitability."

For the fourth quarter ended February 2, GameStop total sales hit $3.56 billion, down from $3.58 billion during the same period last year. Comparable store sales fell 4.6 percent. Meanwhile, GameStop's digital sales jumped 60.3 percent and mobile sales turned in $100 million, helping offset the weakness in the core business.

Adjusted net earnings for the period rose 9.5 percent to $262.3 million, though GameStop said this was primarily due to the positive impact of the 53rd week in 2012. If impairment charges are factored in, net earnings were $261.1 million, up from $174.7 million last year.

For GameStop's fiscal 2012 ended February 2, the retailer reported total global sales of $8.89 billion, down 7 percent from $9.55 billion last year. Comparable store sales fell 8 percent. New and preowned sales fell year-over-year due to the "longevity" of the current console generation, GameStop said.

Adjusted net earnings for the year hit $403 million, compared to adjusted net earnings of $405.1 million this time last year. When restructuring, impairment, and debt retirement expenses are factored in, GameStop actually recorded a net loss of $269.7 million for the year.

Looking ahead, GameStop said it believes the arrival of new consoles from Microsoft and Sony, as well as Grand Theft Auto V, will provide a jolt to the company's bottom line.

"As we look towards the start of the new console cycle, our industry market model indicates a return to growth with the launch of new game systems," Raines said. "GameStop is strong, healthy and ready to lead the industry and its customers into the next phase of gaming."

Though GameStop is optimistic about the outlook for the second half of the year, the first half will be a challenge, the company said.

"Ahead of these events, GameStop expects the first half of the year to be challenging as consumers postpone purchases leading up to the fourth quarter console launch."

In a post-earnings financial call, GameStop revealed that 97 percent of its stores are profitable. In addition, the company said its PlayStation 4 "First-to-Know" list has risen to 900,000, up from 600,000 earlier this month.

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Eddie Makuch

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.
86 comments
francpisek
francpisek

What you think will happen with so many users of PS3 (or Xbox360) used games market? How many of us are ready to migrate from this now to new console when knowing the used games market is a no-go and prices are still high (much higher like on Steam)? I say not much Sony (Microsoft), not much in "a 2-3 more years at least" time :=) And that would change dramatically if users would know prices are right or used market is live on new system.

At Sony they know that with used games enabled the sale of PS4 console would be much higher. Now they are between the choice of losing market share or losing money...they know they COULD earn more money with used games ban on their consoles (lower system sales but high extra fee from developers could end in more of total earn).

To me it seems game prices will be lower of course, but within game console world, which can not be compared to PC enviroment and Steam concept, games on PS4 (or new Xbox) will still stay high and there would be less players in case they will ban the used games market.

MatrixGamer78
MatrixGamer78

A time will come when GStop only sell console hardware and its accessories.

Toysoldier34
Toysoldier34

PC gaming has been going strong the past 2 years or so and is only growing.

grimwatch
grimwatch

So many peole complain about the prices Gamestop will pay for used games. Lets do a quick check here - did anyone put a gun to  your head and make you trade your games? No? Then you must have been willing to accept the price you got for them. Your old games are never worth what YOU think they are worth, they are worth what someone is willing to pay for them. If you dont like the price, walk away. Sell your game online if you can, or use your old games to prop a table up or something. Whining because a company (whose goal BTW, is to make money), did not share your (probably overly optimistic) valuation of your game isnt going to change anything. On that note, since anyone selling their games online will be looking to make a profit themselves, and without any of the legal fallbacks given by purchasing from a registered 2nd-hand goods dealer - not really sure where the high-handedness is coming from. 

Sevenizz
Sevenizz

If Gamestop goes out of business, it will be very bad for consumers.  If you can only buy say God of War off a Sony online store - then they can charge whatever they want for it and never discount it.  It's called a monopoly and it's bad for consumers.

BiohazardXTREME
BiohazardXTREME

If by challenging, they mean that there weren't very many good console games that came out last year, and that the whole year pretty much relied on HD remakes, then yeah... Real challenging.

CEMETARY_GATESx
CEMETARY_GATESx

Yeah, it's getting harder and harder to rip off gamers for used games.  My favorite is when they have a big +50% on used game trade ins, but then drop the value of the trade in by -40% that day.

With more competition from direct gamer trading sites, it's a wonder GameStop isn't nearly bankrupt.  They will join the ranks of Tower Records and bookstores.  "Power to the Gamers" indeed.

plaintomato
plaintomato

I wonder if the next gen consoles will suffer a slow start due to people defecting to PC because of the 10,000 year console cycle?

Or maybe due to feeling the hit of an unprecedented amount of money spent on console games that are flushed down the toilet with new, non-backwards compatible systems?

Probably not. But something in me kinda wants to see the next console gen suffer for the constant "we hate our consumers because we can" attitudes of MS and Sony.

mr_squibble
mr_squibble

Gamestop put me on the PS4 First-To-Know email list without me asking or signing up, so I can see how those numbers would grow quickly. Free spam must be a perk of their PowerUp Rewards Pro membership.

Gallowhand
Gallowhand

Well, they'll either sink or swim, but I can certainly see them being squeezed out as time goes on and more people switch over to the digital shops on each platform.

Personally I only buy physical copies from online retailers (like Amazon), and digital games from the likes of GOG and Steam.  Haven't bought anything on PS+ yet, but that may change in the future.

lunar1122
lunar1122

well they profit off a legal form of piracy, so i dont think anyone would feel to bad for gamestop if they close down.        However there is a reason piracy exists or selling used games exist, I dont pretend to just sum up everyone as cheap bastards or stealers.  I do think games being so expensive is the reason why companies like gamestop should exist. 


The best solution would be complete abolishment of gamestop like companies and used game sales. Then make all tripple A games cost $30 u.s dollars instead and less money for lesser titles. 

SecularSage
SecularSage

I pre-ordered Bioshock Infinite PC via Amazon for some amazing perks, downloaded the game ahead of time and was playing by midnight. I didn't have to wait in line, listen to upsales pitches for strategy guides or memberships, and I didn't have to listen to how if I didn't pre-order a AAA title I might risk not getting a copy on launch day.

Instead, I sat at home on my couch, launched the game and played. 

Gamestop can't match that experience, and as more backlog titles show up on PSN, XBLA and Steam, their value proposition is only going to get worse. Gamers are tired of being fleeced, and Gamestop has a dying business model. Used games can be just as easily bought and sold online these days, and the demand for them is decreasing in the face of digital sales.

Within the next 5-10 years, Gamesstop is going to go the way of Blockbuster, first closing dozens of stores, then hundreds. And good riddance.

UberGamer44
UberGamer44

these guys are simply saying make a new console every year.....

Kano92
Kano92

Gosh I wish Gamespot would stop posting Gamestop comments. Who cares what they say. Why all the sudden Gamespot cares about Gamestops comments. Gamespot please only comment on news about gamestop, don't cover their comments on gaming news. Avoid gamestop like the plague.

emptycow
emptycow

ps4  is going to sell record high numbers day one

Talok
Talok

Would you like to sign up for the power rewards so you can get a WHOLE 10% more with your trade ins! Were talking literal cents, instead of buying that perfect condition game for 3 dollars, we'll give you a WHOLE THREE DOLLARS AND THIRTY CENTS! BOOYA!

USAPATRIOT21
USAPATRIOT21

Would you like to get a warranty on your new game to protect you from Gamestop buying it back for 3 dollars and selling it for 40?

CptSkyfish
CptSkyfish

I don't like how GameStop tells you there's exclusive DLC with your pre-order! You then enter the code given to you on your receipt into the PSN/XBOX-LIVE and then you get the DLC. This is fine but when you go to enter the code that's found on the back of a pan flit found inside the game case most of the time it'll tell you you've already accepted this DLC   which is found on the damn RECEIPT! 

DisasterpieceMK
DisasterpieceMK

Uh huh. Or maybe it because your policy is to annoy the living hell out of customers every time they try to make a purchase that is driving sales down and away from your stores. Hey, I get it - you're in the business of trade-ins and pre-sales. But to have the same argument with the same two employees on why I choose not to pre-order my games even when I tell them to shut up about it is ridiculous. "But... but... you knew that Bioshock Infinite was going to be awesome!" No, actually I didn't - it looked like it was going to be very good with the potential for awesome. And I am also on a very strict gaming budget with a huge backlog. I can afford to wait until post-release and see what the gamers think (not the game reviewers I may add) before I make an educated decision (or risk). Ask me about one pre-order because you have to and I'll politely decline, we can move forward with the transaction.

mike300zxt
mike300zxt

I was desperate for a new console 2 years ago.  They took too long, so I switched back to PC gaming.  With the money I save on games with Steam sales, I bought a $200 video card, and now I can play everything on Ultra settings.  With an HDMI cable to my TV and an xbox controller for windows, it's like playing games on the next gen of console today.  I'm still eager to see what the next gen consoles bring, but it would have to be pretty insane to get me to come back.  Oh, and xbox live would have to be free.

dogfather76
dogfather76

I can't wait until the Xbox and PS4 take measures to effectively put this company out of business. I have never bought anything there and never will.

Thegamer16
Thegamer16

I don't by used games to begin with, I'd rather the money go to the developers/publishers.

But if people are ok with used games, they can find them a lot cheaper on ebay a good bit of the time. GameStop can be a nice convenience because you don't have to wait for a game to ship, and they usually have a much better selection than say wal-mart. But it's by no means the cheapest place to buy games.

lokar82
lokar82

I have no idea how Gamestop stays in business.  They never have good sales and their trade in prices are lousy.

Sevenizz
Sevenizz

I highly doubt the reason for a slump is the current console cycle.  Let's see - there's the recession, lack of quality titles, the recession, online streaming gaining popularity, and the recession.  There's a multitude of reasons why people have been cautious about their entertainment dollar.

camelotcrusade
camelotcrusade

Next-gen consoles may not be so helpful to GameStop if they do away physical copies and sell via direct download.  No need for Gamestop then!