GameStop posts $9.08 billion in annual earnings

Game retail giant's revenue rises 3.1%, but profit falls 5.3% to $377.3 million; stock spikes after full-year outlook revised upward.

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This morning, GameStop reported its earnings for its fourth fiscal quarter and 2009 fiscal year, which ended on January 30, 2010. The three-month period saw revenues rise slightly by 0.9 percent to $3.52 billion, but profits fall 7 percent to $215.9 million. For the full year, the company saw revenues go up 3.1 percent to $9.08 billion, but profits slip 5.3 percent to $377.8 million.

GameStop plans to spend $75 million opening 400 more stores this fiscal year.

Despite the mixed picture, GameStop CEO Daniel DeMatteo was bullish. "GameStop delivered its second highest earnings year ever in fiscal 2009, in spite of the weak worldwide economic environment," he said in a statement. "We saw global market share growth as new software sales increased 1.2 percent."

He continued, "In 2010, we see great opportunity to deliver earnings growth by improving global operational efficiencies, expanding our leading market share, and utilizing the buy-sell-trade model to drive new and used software sales."

Indeed, GameStop is so optimistic about the current fiscal year that it predicts annual sales to increase 4 to 6 percent. Of that, the company expects new software sales to rise 2 to 5 percent and used product sales to climb between 5 and 10 percent. However, it also believes new hardware sales will fall between 5 and 10 percent despite a rumored Xbox 360 slim launch and the planned fall release of the PlayStation Move and Project Natal motion-sensing systems.

And while rivals like Game Crazy are closing down retail operations in the face of increased digital distribution, GameStop plans to spend $75 million opening 400 new stores worldwide. It also plans annual per-share earnings of between $2.58 and $2.68, a 14 percent to 18 percent increase over the current year's EPS. That latter figure sent GameStop's share price soaring on the New York Stock Exchange. It closed the day up 6.55 percent ($1.30) at $21.16.

Discussion

139 comments
Ravenlore_basic
Ravenlore_basic

This is sad.... ... .. . . . . . . . 1.Gamesptop rips off people. They pay u $5.00 and they sell it for $25.00 2. Publishers do not make any money from these sales. - . - . - . - . - 3. Ebay is a better way to sell games but the game may not work which is the big problem.

Sins-of-Mosin
Sins-of-Mosin

One of my local Gamestops got robbed last night, what goes around comes around.

Cabal23
Cabal23

@ -Saigo- So then pawn shops are criminal? Used cd stores are criminal? So then selling used cars is criminal? No one gives you what you want, they give you what makes them a profit. They are providing a service you would otherwise not have access to. Not sure what country you live in, but here in the capitalist USA we are about profits. I hope some smart person starts a rival store (oh wait that happened multiple times and they all failed). It is a minimum wage job and managers make about the same as with any other retail operation. That is why the quality of employee is not very good sometimes. Where have you had excellent retail customer service in the past year that pays it employees minimum wage? When you grow up and become an informed consumer then choose not shop there. I for one could care less as long as they give me something for my games. I don't want to pay Ebay to host my product, nor do I want to take the time to put it on craigslist. I went in last week and traded Mass Effect 1 & 2 and BC 1 and got BC 2 for free. How is that a rip off? Two three year old games and one new one for a brand new $60 game. I suppose they are supposed to trade you any game you want or give you tons of money for your crappy trade-ins? Inventory has everything to do with this. Why keep giving $30 for a game when your company has more than enough supply to cover the demand? That is why all the other companies have failed. I can't possibly spell this out any clearer.

zeniftan
zeniftan

I haven't been to a video-games store in years. When I used to walk down our local shopping highstreet I'd go into my local Gamestation EVERY single time, because in the UK the people in a store called Gamestation actually KNEW all the latest news on games, and you could have a really decent conversation with them without even buying anything and then leave and they would still welcome you back with open arms. (I'm actually friends with one of them still, purely by meeting him at the gamestation when I made a purchase.) Nowadays though the other games store chain (GAME) bought ALL of Gamestations stocks COMPLETELY 100% ,and now they hire the same bad mannered, un-knowledgeable types of people as they do at their original GAME stores. (Sure some of the cool types that know their stuff get hired every so often, but they sure as hell aren't working at the Gamestation where I live, so I don't see the point in visiting anymore.) If I'm selling my games, I sell them on Ebay. If I'm pre-ordering and I want them on the day of release, I buy them from Gamestation's online store. (That way I don't have to deal with their staff members bad attitudes.) If I want a pre-owned/old game REALLY cheap, I buy from Amazon for a 2/3 of the price they charge at GAME. If it's a PC game, I'll buy it from Steam.

drokmore
drokmore

If they havent learned from blockbuster that store based selling has high overhead and things like gamefly and digital download will put you out of business.

noahjwhite
noahjwhite

I don't know how they could not make a profit with this business model. What I don't understand is why people sell them games. You could get 2-10x the money buy selling on ebay.

jad206
jad206

I found this funny, but while l was in Gamestop selling games, the kid told me that l wouldn't get much, and l should sell to blockbuster for more money. So it's not so much the employees that are jerks, but the company rules.(Sadly blockbuster only does in-store credit and no cash)

Trogeton
Trogeton

gamestop rips people off when it comes to trade ins

wiidsduelpack
wiidsduelpack

For future comments Gamestop March 26 1/2 game prices will only be on games that sell horrendously right? What should we buy.

CharlesSteak
CharlesSteak

Always sell my used on eBay, and consider myself to be a reputable seller (never got a negative feedback). On average, I get three times more what I would have gotten from GameStop, and buyers usually get the games for half of what GameStop would sell them for. The gamers win every time. GameStop just loves it - they'll buy a newer used game for half its worth (sometimes, other times less) and sell it to you for $5 less than a new copy. Don't get me wrong, I love GameStop as much as the next person, but absolutely refuse to support that side of their business...unless, of course, I plan on returning a used game before their allotted 7-day used game return policy is up (almost like a modern day rental store), or I get a jonesing to play NHL Hitz or NBA Street 2, which would only set me back about $3.

ohjtbehaaave
ohjtbehaaave

Haven't bought from EB or Gamestop in ages. Amazon.com blows them all away with amazing deals!

Asm92784
Asm92784

@destinys_martyr I dont know about the gamestop you go to, but the ones where I live, will in fact, give you cash, though it is slightly less than the trade-in value. I have sold them several games and even a couple of old consoles before, and relatively recently.

And as for the lack of structure in my previous comment, the comment box is limited on the number of characters, and thus I had to cut down my original comments size to make it fit, so some of the formatting got lost.

Mr_Manikin52
Mr_Manikin52

I hate Gameslop with a Passion. I hope some slick kid will start a rival video game that really puts the gamers first.

-Saigo-
-Saigo-

Their business ethics are criminal...but this is proof that crime pays after all.

thorughfire
thorughfire

I hate GameStop and here is why: For my birthday I went and bought a ton of new games,1 of those was Guitar Hero World Tour (Had better tracklist then GH5).The guy at the counter handed me the disc like nothing and I went on my way.I go home and play my new game and it fails to work,I have tried numerous times trying to get it to.I check the disc and its filled with scratches.I mean filled like playing the same CD in your CD player 100 times through from begining to end. I go back to the store the same day and say to the manager that they sold me an extremely used disc.He tells me oh sorry about that but it was the only copy we had.I look at him and I say so instead of telling me that you only had an extremely used copy of the game,You sell it to me like it was brand new for 40 dollars.He has the balls to look at me and say well we can exchange it for a different game.I felt like punching him in the face but instead I looked at him and said Just give me my money back for it and I leave. GameStop will rip you off,Trust me.After this experiance,I check all my "New" games to make sure they are new.If it is used then I make sure I get the best used disc availible and if there is none then I wont buy it. FYI - All their used games are the same,Just in huge bundles.There are racks of PS2 and Xbox games and its 20 - 40 copies of the same game but spread out.

VolcanoMan001
VolcanoMan001

I bet $8 billion of that $9 billion was made off of their used game racketeering.

masterchief6380
masterchief6380

Only problem I have with GameStop is the trade backs are borderline criminal.

okassar
okassar

If I were Gamespot I would be cautious... I mean, there's no doubt they're good at the business, but if you think about it, with almost everything going digital nowadays, Gamestop should anticipate I slide in sales due to the takeover of games bought online. Either next generation or the one after it, we'll be almost rid of discs. Blu-ray is probably the last great transition in discs before everything going digital, so we're pretty close. Other than that though, congrats Gamestop (although I prefer buying games on sale at other places because Gamestop usually doesn't have big sales).

Ardus
Ardus

I don't hate Gamestop because of their crappy business ethics or asshat staff that sell you "new" games they know are broken then don't let you return them, but let you trade them in for $10. I hate Gamestop because they have put all of the quality local game stores in my State, the ones that still sold PSX and Dreamcast classics, rented out PC games and Anime DVDs, and actually gave a damn about their customers, out of business. Their FFXIII "release party" was forcing 50+ people to stand in line outside their store in 30 degree weather. Glad that I went to a 24 hour Walmart in a lower income neighborhood where there were only 3 other people waiting inside for the release. Of course they make a profit, Gamestop system of preying on stupid kids who buy games which they don't intend to play more than once by letting them trade in their games for pennies is too good to fail.

Sweendrix
Sweendrix

Investing in this company is probably a foolish move. Selling used games is going to get harder to do as more and more games are delivered directly to home consoles. The industry is going to eventually remove Gamestop from the picture. This is not something that "might happen" but something that "will happen." It is just a matter of time.

SadPSPAddict
SadPSPAddict

So they have a good business model and people keeping going back there. There is a word for people who moan about them but still go there!!

Stefean
Stefean

By the way, folks, you can get cash at gamestop. It's less than the amount of credit you would get. I wouldn't do it, it's a too low amount of money, but you can.

Iceman22n86
Iceman22n86

is it really news to anyone that the biggest retail outlet of the highest grossing industry is reporting good numbers? Of course 2009 was a good year... Arkham Asylum, Mass Effect, New Super Mario Bros. etc. etc. 2010 or 2011 will probably crack even that. And yeah they do make a lot on their used games considering you can only get in store credit so it all comes back to them anyway. Not to mention they give their employees a discount of 15% i believe so that's just a lot more revenue. Most of the time the trade in values do feel like a rip off, but where else are you gonna go? At least you get SOMETHING. It's like the same concept as buying a new car.

Stefean
Stefean

There's a lot of hostility here. Those who hate gamestop, tell me about where you buy your games. Okay, that place (Best Buy, Walmart, Frys, amazon.com, whatever), do you consider them to be saintly companies with unimpeachable business ethics who are only looking out for you? Come on, folks. You're not going to get the amount you want anywhere. Something, to be fair, I can't argue with. I'm attacking no one. I've worked at Gamestop. At least at the store I was at it wasn't any worse than any other business I've worked for, though I do acknowledge that I knew of other stores who were absolutely horrible. Gamestop isn't any worse than other stores of its type. If you want the most bang for your game you no longer want, try ebay or craigslist, or sell it to a friend because you will get more and they can get the game for less than a used game retailer would demand. Used game retailers are a convenience, not a charity. And digital distribution is cool, I use it. But sometimes I have this unfortunate desire to have a tangible copy of my purchase. Not unreasonable. Take care, folks.

spawnofdarknezz
spawnofdarknezz

You guys whine about GameStop's trade values. If you don't like them. Simply don't trade them in. I find it funny how you gripe about trade values then still trade in the game. Stupid people. GameStop is a business, they are there to make money just like any other store. Stop hating!

Alter_Echo
Alter_Echo

Maybe if they used some of this money to better equip the stores to serve people, it wouldnt take me 2 hours to buy a game because some 7 year old is trading in $6000 worth of yugioh crap for barely enough money to buy 1 used game. There really is no reason to shop there. They dont have anything you cant get elsewhere with less of a hassle and without them trying to sell you open boxed stuff as new.

force_user1975
force_user1975

@ destinys_martyr So you support the developers gouging the people but you don't support Gamestop for selling cheaper games to the people? I buy CD's man, CD's still sell great. The music isn't compressed and I will rip those to my P.C. and then upload them to MP3 player or Ipod or whatever. The bottom line is music is one thing, games are another. I like being able to spend $50 and getting 4 or 5 used games as opposed to spending it and getting just one. I agree Gamestop isn't the place to sell your used Gaming gear. Like I said before as well Ebay or Craig's list is going to get you better money. I am guessing the industry took notice of the PSP Go Flop and will back off digital only media. Wait until Onlive fails...that will ensure disk content for the foreseeable future.

Autolycus
Autolycus

not to mention that their used game sales is almost 700% profit, even on the titles that don't sell, they are faking their books SOMEHOW

Sendmn23
Sendmn23

oh c'mon... these guys give you 55 cents for a game and turn around and sell it for 10 bucks... how are they not going to post billions earned... stole more like it! Game stop stole 9 billion in last year alone.... now that puts it in perspective if you think about it!

Autolycus
Autolycus

wow 8.7 Billion dollars in cost of operating a business?! COnsidering they pay minimum wage to their workers (i was there 8 years straight and NEVER made over $8.50 /hr) and when I was offered Store Manager, they offered me 35/ year (which equals under $5/hr for the time put in). Makes me think that the IRS needs to take a look into Gamestops books. Oh wait, its the government, they never hold anyone responsible.

AjaxsLastStand
AjaxsLastStand

I'm no fan of Gamestop. Why? Because they have little quality control in their employees. When it comes to trading, I'd enjoy getting more back than they offer for most titles. But let's be fair. If you bought it, were you buying it on the premise that you'd be trading it in? I keep my games.

cryofax
cryofax

I agree that they're a business and can do whatever they want (within the law). It's also my right not to shop there. Their prices and trade-in values are terrible. There are so many other better options available. The only time I buy anything there is if it's not available anywhere else (rare) or the price is the same (also rare).

Mickleohb
Mickleohb

destinys_martyr What the heck were you talking about when you wrote about Obama supporters waiting in line for the next Madden? I'm pretty sure franchise consumerism crosses political boundaries... And I really doubt that all games will go completely digital any time soon. In order for that to happen people would need massive HDs and really fast internet. MGS4 was 30+gb and games are just going to keep getting bigger in the future.

MachShot
MachShot

They get to charge what they want because people want to use their products/system. It's business. They are doing nothing illegal or unethical. If you don't even know the difference between the two, you have no right to speak on the subject. GameStop preys on children?! Are you kidding me?! Why don't you go after Coca-Cola and Pepsi? Or McDonald's. Oh yeah, you just had that for lunch. Why don't you go after Nike and Abercrombie & Fitch for the world-wide sweat shops in under developed countries and using child labor? Oh wait, that's what you are wearing right now. Hypocrites. Ass goblins. Jealous ass goblins is what you are. Why don't you go live in Cuba.

Crypto6969
Crypto6969

Gamespot/EB Games also has this trick where if you trade in 2 game you can buy a new game for $19.99, or sometimes $9.99. The thing is, the games have to be worth at least $8 trade. I took a couple games in that I knew they would sell on their selves for over $20 used, they said they were worth $7 trade and therefore did not qualify for the deal. It is really hard finding a game that is worth over $8 trade because these are the good recent releases.

Crypto6969
Crypto6969

Like someone else said, sell your used games on ebay.Then use that cash to buy other games on ebay. They do have unopened new games on ebay. If I take used game into Gamestop, and they offer me $1 trade or even$5 I say no thanks, then sell it on ebay for a lot more, by the time I add in the shipping charge.

Master_I
Master_I

@ Cabal23 "GS is the number one gamestore in the WORLD. " - Never heard of them.

yixingtpot
yixingtpot

I don't shopt there anymore, because the loser manager insulted me. F' him... people need to learn to sell via ebay instead of handing huge profit margin every time they trade in a game for their lame credit. If you get $4.00 for a game, they sell it for $30 or so, so that's like handing them $26 dollars, "here i'll bend over, take my $26" then i'll pay another for some other used game that you make another $30 bucks on plus paying the difference etc, People need to use eBay to sell their stuff. You'll get so much more money in the end.

destinys_martyr
destinys_martyr

@ Asm92784 With lack of coherent sentence and paragraph structure aside, you should realize that Gamestop does not give anyone "cash." Your trade-ins are only for store credit. It's pretty clear from their earnings that they are not losing any money. They have a very successful business model that preys on kids who come in with used games. Not to mention they won't shut up about wanting you to reserve a game if you simply ask for a release date. They're banking in on technology that won't be around much longer, i.e. media discs.

-Snooze-
-Snooze-

Asm9274 is so correct it hurts :(

Asm92784
Asm92784

And no I do not work at gamestop, own stock, or have any sort of personal interest in the company, I just hate idiots who complain about things they clearly do not understand.

Asm92784
Asm92784

Clearly most of you people complaining about GameStop clearly have no idea how a business works. They cant give you $40 for a game they are going to sell for $45 because of several reasons.

To begin with, they have no idea how long that game is going to sit on their shelves, they have no way to guarantee that the game wont be there so long the price wont drop down and they end up losing money. Plus, if they did that, they would get way to many copies of the used games in. People would buy them, beat them, and trade them in, causing an abundance of used copies of games, which would in turn, lead to my previous argument of them losing money on copies that sit around to long.

Not to mention, they have to cover all the costs of running the store. For those you who actually bothered to read this article, it actually says that despite the earnings being up, their profits were actually down, do to an increase costs. Not to mention they run the risk with every trade in that if the item is stolen or broken of not being able to get their money back and end up just loosing out.

And finally GameStop is a CONVENIENCE, and thus you pay for it. Yes, you can get more for a trade-in or buy a game for less at other places online, or by buying/selling them on ebay, but those require much more effort on your part. I can take a game into gamestop, and walk out with either cash or some new games the same day.

So if you are willing to wait, then do it, otherwise stop complaining.

destinys_martyr
destinys_martyr

[This message was deleted at the request of the original poster]

Cabal23
Cabal23

@ darkcomedian What smaller stores are you referencing? In the metropolis (Atlanta) I live we have nothing other then the standard chains with Gamestop being the most prevalent, followed by Blockbuster. There are no more mom and pops because they couldn't be competitive. Giving all those games away for more money than everyone else and taking in everything people bring made them fail. GS is the number one gamestore in the WORLD. They got that way from consumers using their service, so obviously they did something right. Don't want that opned copy, go somewhere else.

destinys_martyr
destinys_martyr

@force_user1975 You say that but you won't stop gaming. It's like someone who said when all music goes digital they'll stop listening to music. The opposite has occurred. The majority of people prefer getting music online now (iTunes, Rhapsody, etc.). Remember when you're buying the game used you're not in any way supporting the developers who made the game, you're simply lining the pockets of Gamestop. The PSPGo is a failure because well.....it's another PSP.

Cabal23
Cabal23

@ slayerizer Be a better consumer then. I took Massive effect 1 & 2 and BC 1 and got BC 2 for free after the additional 50% on my trade in's. Totally worth it since I got my monies worth out of all three several times over.

force_user1975
force_user1975

@destinys_martyr So streaming games isn't greedy? They want to cut out the middle man. No "Used games" would be a travesty. If you want to sell used consoles, games the best place is Ebay or Craigs list. You cant expect Gamestop to pay full price for your used items. Right now anyone could go into a gamestop and Get Fable 2, Gears of War 1 & 2, Halo 3 and Crackdown for under $50 used at Gamestop. Think that would be possible if we have to download everything? I think not. Also have you noticed how much of a failure the PsP Go is? People want to own and actually hold the games and media they buy. The day Video games go strictly download is the day I stop gaming.

thermalcold
thermalcold

I wanted to sell my original psp to get the 3000 model, but they only wanted to give me only $40 for it. When I looked for the price they were selling it (used) on their shelves-$100-I walked out in disgust. Corporate greed at its finest.

JuanJo_H
JuanJo_H

I wish we had a store like GameStop in my country...