GameStop rakes in $7.1B in '07

Record-breaking financials marked by dramatic 46 percent profit rise during holiday quarter; megaretailer credits Super Mario Galaxy, Call of Duty 4, Guitar Hero III, Assassin's Creed, and Rock Band.

Last month, AdWeek magazine revealed that GameStop, the world's biggest specialty retailer of games, had been successfully marketing games via its in-store television network. Today, the Texas-based retailer's annual earnings report revealed it successfully sold plenty of other games as well.

For its 2007 financial year, which ended February 2, 2008, GameStop revenues increased 33 percent to hit a massive $7.1 billion total. After debt retirement costs of $12.6 million, the company's net earnings--aka profit--for the 52-week period were $288.3 million. The retailer is enjoying a year-end cash balance of $857 million despite having had opened 586 stores worldwide during the period.

For the most recent quarter, GameStop reported net earnings of $189.8 million (up 46 percent) on revenue of nearly $2.9 billion (up 24.4 percent). One of the main reasons for the retail chain's successful holiday quarter was last year's bumper crop of top-shelf games. GameStop singled out five in particular as being best-sellers: Super Mario Galaxy, Call of Duty 4, Guitar Hero III, Assassin's Creed, and Rock Band. The company also cited its highly profitable used game business as a key revenue driver.

Console sales were also a big factor in GameStop's banner 2007 fiscal year. "What is particularly noteworthy is that 2007 was a transformative year with hardware sales setting records and the installed base of users reaching an all-time high," declared CEO R. Richard Fontaine in a statement. "Likewise, the expanding demographic profile of the video game player has moved this business into the mainstream of entertainment."

Looking ahead to the current fiscal year, which ends on January 31, 2009, GameStop's guidance is positive. The company predicts revenue growth of between 19 and 21 percent for the year, with sales rising 24 to 25 percent in the first fiscal quarter thanks to the releases of Super Smash Bros. Brawl, Devil May Cry 4, and the forthcoming Grand Theft Auto IV. The company expects to open another 575 to 600 stories during the 52-week reporting period.

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257 comments
Masterdj1992
Masterdj1992

I believe Gamestop will continue to grow (i might invest some stocks). Anyone else accidentally type in Gamestop.com instead of Gamespot.com every once in a while?

jaffy2008
jaffy2008

Surely if they sold second hand games at a reasonable price they'd sell a a greater number, which would mean fewer people buying new, hurting developers more?

guitarman89
guitarman89

Not really surprising considering the raging gaming market and new games/consoles available. I cashed in on this myself by owning stock in Gamestop. I sold it right after Christmas and collected a nice little profit for myself.

diesel4lg
diesel4lg

sunsetgun, you must be a DM. GS cares nothing for their customers or employees. They have no competition that is a threat to them. I only buy new games because I know exactly how it works! Developers get know love in the end. All hail new games only.

dee2k
dee2k

Wow... they only kept 4% of what they sold. They sold $7.1 billion and only had $290 million left over. That means 96% went to Microsoft, Sony, Nintendo, other developers, Gamestop employess, & of course their bills/taxes!!

not_dryad
not_dryad

"sunsetgun, I have two words for you E. Bay. Besides that......good for Gamestop. Maybe they can start giving out better trade-in values." You're retarded, aren't you?

VolcanoMan001
VolcanoMan001

amefford: "First, re-sale price minus the used purchase price does not equal profit or as some people have said "PURE PROFIT"." Ill informed? The fact is, profit is profit. What they do with the "profit" they earn on used games is determined by their level of expense. You can't say, GS buys a game at $20 and sells it at $54.99 but doesn't make a profit off the sale because they have to pay the employees LOL. From what I hear, the employees aren't paid much anyway. The fact is they rip people off and resell a game at over 200% what they paid for it and the issue is not GS's overall profit (although this story immodestly covers that), the issue is the profit on a a single transaction basis. But lets distract people with the hair splitting!

BranKetra
BranKetra moderator

sunsetgun, I have two words for you E. Bay. Besides that......good for Gamestop. Maybe they can start giving out better trade-in values.

amefford
amefford

It always suprises me how ill informed so many people are on economics. First, re-sale price minus the used purchase price does not equal profit or as some people have said "PURE PROFIT". Those stores have to stay open, employ staff, insure against losses, maintain inventory that may or may not sell, pay taxes, etc.. Second, as many have said, this is a free market, so purchase and re-sale prices are set at what the market will bare. If they pay too little and sell too high then how are they in business at all? Someone would have come in to undercut them, driving prices down. Those of you saying it should be illegal to do what they are doing are actually just proposing a socialist system of fixed market prices. Well, we all know how well that works, dont we? I for one dont see the value in selling my games for a fraction of what I bought them for nor buying used games for almost full value but thats just me and there are obiously enough people of a different mind to keep the place open.

Smejs
Smejs

Zintarr I agree that the profit is really good for Gamestop in some cases but we buy all games in all quantities so we have no guarantee to even sell the game we buy from you before a few years have gone by which for obvious reasons is not a good deal for GS. It is all about taking the risk and that is what GS does. And as I said before if you do not like the current trade in price wait for a special offer to deliver x junk games to get a huge discount. Like in all the Nordic countries we currently have a trade in 3 XB360 or 2 PS3 titles and get GTA IV for free + a gift card worth ~15 Euro with only a handful of titles excluded from the deal. That way you get maximum profit for your junk games. Maybe I do not get the highest salary compared to my work effort but at least I wake up every morning and feel the joy of getting to work and I get to play games for free so I do not have to pay all the money I would earn extra from working some place else where I would hate even waking up :)

Doeshza
Doeshza

I know ive did my part to help pad those numbers! I know i buy for PS3,360,DS, and WII so i feel i should get one of their cash register keys named after me for all the ringups! lol

sunsetgun
sunsetgun

You guys kill me. Every time a news story pops up reporting GameStop's success there are hundreds of posts from people ridiculing and complaining the company and the employees. I am not even going to get into the argument here but let me just say... a lot of you think you have it all figured out. I hate to break it to you but you don't. It's a good company to work for and it's a good company to deal with. Also by the look of things, right now it's a really good company to invest in. You guys can keep shaking your fists and crying about used prices, trade in values, and employees. After all, it is just your perception.

nomadski69
nomadski69

The problem isnt used prices, there ARE alternatives to buying preowned in Gamestop, and far better economically to the customer too - the prices are high only because people are paying them. So stop buying them. What is far worse is the fact i have to pay an RRP of £55 for Burnout Paradise or £50 for Lost Odyssey - thats $110 and $100 which is daylight robbery for a game - unfortunately there arent too many options for the high street buyer for new games, even websites dont knock THAT much off a brand new game, so that is where we are getting screwed, and why so many people are taking an alternative route to getting hold of their games, which noone benefits from. Greed will kill us all in the end.

mindtricks12017
mindtricks12017

Gamestop aka Babbages aka Software etc., started focusing on the used game business when they acquired Minneapolis based Funcoland. It wasn't til then that they realized how profitable buying and selling used games were. Point is, Gamestop realized how great the concept was, focused on it and turned it into a cash machine. If they didn't do it, someone else would have. I personally give kudos for them to turning it into what is now. I'll end it with this . . . they are not forcing you to trade in your game, nor are they forcing you to buy used games. If you refuse to support this giant of a video game retailer then go to Game Crazy, Play n Trade, ebay , craigslist or the many other OPTIONS that are out there. I think it silly to knock a company that is filling a need that obviously needed to be filled. Don't like the trade in value? DON'T sell! Don't think saving $5 buck buying used is worth it? BUY NEW! Better yet, open your own store and try to turn a profit. Go Gamestop.

VolcanoMan001
VolcanoMan001

I agree with GIF, it should be illegal to sell used games for the value that GS sells them for. They are basically taking a game that a developer and publisher has spent millions of dollars creating, buying it off someone, putting a sticker on it and selling it for 90% of the value that the game was originally sold for. Meanwhile, used games continue to circulate and change ownership through GS as users buy and sell them off and this grants exponential increase in revenue at no real expense to them. The "creators" don't get a dime after the initial sales... It is a joke. GS's buying and selling of used games is in NO way comparable to a one to one resell on eBay, that is one customer bartering with another one trying to recoup some of the $59.99 back that they invested on a new game. GS is a retail operation that is buying these new games from customers for pennies on the dollar and reselling them on a massive nationwide scale at damn near face value. But the most perplexing thing about it is that customers continue to buy and sell used games through GS despite the fact that they are obviously being ripped off.

VolcanoMan001
VolcanoMan001

A little modesty GS? I will hazard to guess that the money is all coming from the poor saps that bring in their $59.99 game they just bought and sell it to GS for $20 who in turn sells it to another poor sap for $54.99. That is 275% pure profit! It is just plain silly, if everyone would stop buying those used games at that price then they would lower them to a more reasonable amount like say... $39.99.

GIF
GIF

SwiftyMcQuik , Yes, the consumer selling or buying their game on craigslist or Ebay is okay because they are not doing it in high volume the way your paid employer is doing it. In HIGH VOLUME to profit themselves because their is no law against it when their clearly should be. Obviously we both have differing opinions so you would resort to childish tactics of trying to put yourself above another because of a conflicting opinion. You look at things in a much simpler light merely because it does not affect you as a Gamestop employee but I look at things taking into account how this could affect me one day as a creator who would see all my hard work profit someone completely unrelated to my original art. This topic isn't about you, its about a corporation whom has become rich by selling games for their full profit because there is no law thereby undermining developers.

SwiftyMcQuik
SwiftyMcQuik

@GIF I was only referring to trading in vehicles at dealerships, not buying them. However, I do appreciate you actually reading my post. Good job on that. Your comment on trading or selling your games to another person or selling them on Craigslist is an option, however you completely contradict yourself in your next sentence pertaining to the developers not getting any of the money. So a retailer selling a used game hurts the game developers, but someone bartering or selling that same used game on Craigslist or Ebay is suddenly ok? The developers STILL don't get any of that money. And before you go off on a tangent that game developers are getting the shaft, consider this train of thought. Anyone remember Beyond Good and Evil? NO ONE bought that game initially when it came out, even with the good reviews. Production on that game lasted three months tops. However, if it weren't for buying and re-selling that game used, you wouldn't have near the number of people playing it instead of just selling it new. This gives developers exposure. Exposure equals more chances to do bigger titles. Bigger titles equals larger paychecks. I dare you to actually find a game developer that thinks that buying and re-selling his game is a detriment to his profession.

GIF
GIF

If you want to stop letting Gamestop have 100% of the profits for used games, the best way to do that is guess what, do NOT buy used games from them or anyone else. Buy your games brand new, trade them in or give them away BUT NEVER BUY YOUR GAMES USED from a retailer. Get them off another person or trade them to another person as a barter at somewhere like Craigslist. This does hurt game developers as game retailers had absolutely no hand in making the game whatsoever. And no, this does not cross over into being similar to buying a used car. Two completely different products with varying degrees of shelf life and usability. Trying to tie some sort of similarity between a used car and a used game is like attempting to compare an apple with a kumquat

diesel4lg
diesel4lg

So...how much of that does GS give back to the overworked employee's and managers? I'll tell you, zero, zip, nada! Complete monopoly on the industry. Pleas, someone stop the monster. People complained when a certain software company tried to monopolize their business, where are those voices at now/!

zintarr
zintarr

Ha...I hear you there!

SwiftyMcQuik
SwiftyMcQuik

@ zintarr I'll trade you my concept of paragraphs for your lack of proper punctuation. I'll compromise with you even considering the fact that the Gamespot forums don't correctly use paragraph form. gg.

zintarr
zintarr

My God! A video game store Fanboy! Or are you Gamestop manager number 2? Also before you speak about ones education you should get someone to explain to you concept of paragraphs. Gamestop is a corporate pirate stealing from not only customers but from developers, as the developers get nothing from used games sold so in turn they raise the prices of the games. Defend it if you want.

SwiftyMcQuik
SwiftyMcQuik

@ zintarr If you're so distasteful with your position with the company, why don't you just leave? I'm sure you probably have a college degree that would warrant your low salary, therefore it would be easy to just leave retail all together and find something better......... Ummm yeah. Stay in school kids.

zintarr
zintarr

The Gamestop manager seems to miss the point that the people around here seem to be questioning the pricing of the products sold in relation to the profit made by Gamestop over the year. The overall opinion is that Gamestop and developers are overcharging their customers and we are starting to get sick of it! Also, as a Gamestop store manager you are just as poor as the base employees making minimun wage in the stores, but I am sure the CEO is thrilled about your loyalty as he swims in his earnings. But hey, Congratulations from me!

SwiftyMcQuik
SwiftyMcQuik

It seems everyone bashing the trade-in policy at Gamestop is lacking common sense. Trading in games is no different than trading in your vehicle to a dealership. Do you really expect the dealership to give you more than 50% than what you actually paid for the car? Last time I checked, these weren't non-profit companies. Gamestop is not the March of Dimes. If you bring your games into Gamestop and you don't like that value that you'll get for them, here's an ideal concept: DONT TRADE THEM IN. You would be pleasantly surprised at how many people in this country still do not have internet access, or access to Ebay or Amazon; so Gamestop is their only option. Obviously trading in games and re-selling them at unfair amounts is so terrible, that Best Buy and Circuit City are trying to be unfair also and adapt Gamestop's business plan. I personally don't trade in games at Gamestop unless they have a special on trades that would benefit me. They have a great selection of used games, and you can find some good gems on a good day if you're lucky. I only pre-order games from them if I plan on getting them. I would much rather wait in line at a Gamestop for my pre-order than have to go through a line of soccer moms buying sneakers and baby clothes at a Wal-Mart. Simply put, if you don't like Gamestop, don't shop there. Obviously they are doing fine without you anyways.

Smejs
Smejs

Hey GS Readers. As a manager for one of the Gamestop stores I agree in some of your points but I have a different point of view in some matters Trade in prices. Yes you do not get more than 50% in return of the games original value in some cases. But as previously mentioned you may be customer number 1000 that wants to sell that specific game and unlike Ebay etc where you sell to a person that is looking for that specific game, your game might never get sold in our store. We do often have special trade in offers and if you are feeling you are not getting the right value for the specific game just wait for a campaign where you for example trade in 3 junk games and buy 1 new at a huge discount. That makes you and us happy at the same time :) Since I am not from the states I do not know how Ebay works but if you buy a preowned game at Gamestop and it is scratched or you just did not like it you have the return policy where you can throw it back in our face and get a new copy or a completely different game no questions asked and no waiting time or calling back and forth. Oh and saving 10$ buying the game in a store where the clerks do not even know how to spell xb360, instead of using our expertise. Finding out you have the game and then have to resell it, will not save you money in the long run (not that we know everything about every game but we do have alot of gamers in our stores that work because of the joy for games rather than the salary) I know alot of people on these boards have a decent knowledge about games and might find it easier to pick what you want from game videoes, demos, reviews etc. but alot of our customers like us to tell them what they want because of previous games played. Personally though I would hate to buy a defective copy in an internet store and then have to ship back and forth. I was a bit sad to see so many of you bashing Gamestop's success because it is a fantastic workplace for me and I wish we have many more years together! Congratulations from me!

nomadski69
nomadski69

Just goes to show how much piracy is killing the industry......

rose_please
rose_please

ya i saw some guy sell zone of enders at gamestop for only 10 dollars!! ZONE OF ENDERS!! Better than most of the games coming out right now in my opinion.!

Holy_X
Holy_X

Ahhh GameStop..where to begin. I have went in many GameStop stores in different States and everyone I have been to have all been the same. Everyone that I went to it never failed that not just one but all (usually 3) employees had an extreme basic knowledge on games. If it was not Halo, Gears, Galaxy, ect they would have no idea of whats going on. Sum it up, if its more than 1 year old than forget about it lol. My other and much larger gripe is that you don't get crap for trade in value. I have personally witness at a GameStop in Georgia, a customer bring in a game that he purchased for $50 bucks just 7 days before, receive an trade-in offer of only $6! WTF. Here where I live the local gaming stores are the place to go. There may be five different GameStops close by, but most go to the local stores. Why? They have it all. When I say all I'm talking about Atari systems in the original freakin box. Every system and an amazing selection for all of them. Trading and price is actually dealt by the rarity of the game. For example I recently traded 5 N64 games and received $56 for trade torward anything in the store. If GameStop still took N64 games I'd get like 10 cents....maybe. Take in Mario RPG or better yet a Lunar game and be ready for them to flop $70 in your hand for that one rare game. Strait up trades are only $5 bucks. If this home grown store started by just a regular joe 5 years ago and has already opened 2 more stores can have this type of selection and a "True" game value system, then I think "the world's biggest specialty retailer of games" could easily equal or just freaking blow away a small time business like this. This is my 2 cents.

Crombian
Crombian

@Josepiphus Regarding the perspective of internal operations, I agree with you completely. The take I offered was merely an attempt to generalize the role of a principal for the purposes of supporting my point. Change is unequivocally critical in business, and of course I'd take on the challenge if in fact it were my job to do so. As for consumer advocacy, you're right in that it depends on the preferences of a specific consumer. Ultra-Capitalist that I tend to be, my perspective happens to be that I don't take well to the imposition of purchasing limitations.

Tech-head
Tech-head

For me, hatred or love of Gamestop is a non-issue. It is a place to buy games. Nothing more nothing less. Games carry the same retail price everywhere you go (or do for the most part) so what is the big deal. Either buy from Gamestop or buy some place else. What is this I love/ I hate Gamestop rant about? Who cares if you are more knowledgeable than the Gamestop employees, even if you weren't, you would still think you were lol.

Longman27
Longman27

I LOVE my local gamestop and every single gamestop I've been in has been a positive experience. Anyone who is complaining just has a crappy store close, or maybe the stores in central Florida are just amazing lol

Josepiphus
Josepiphus

"I believe Gamestop/EBGames is already offering exclusive add-on content via X-Box Live for individuals who purchased software specifically from them. What you suggest would seem to be an appropriate, albeit aggressive, next step. As a shareholder, I'd be eager to support the strategy with my dividends in mind. As a principal, I'd be aghast at developing an implementation framework for such a move. As a consumer, I'd be somewhere in the middle with a lean towards reluctance. Seeing as how I only fit into the latter of these classifications, I'd have to advocate against the injection of further purchasing limitations...." Noted and agreed for the most part.. Although I think that from a principal standpoint a partnership with a well know developer is a logical first step while you get the logistics sorted for moving forward in house. Also those who don't take on improvment because it's "difficult" are usually the first people/companies left in the dust. While I agree that I wouldn't want to be in charge of the in house gaming division I wouldn't want my company not to do it because of a percieved fear of difficulty. As a consumer my first reactions to the idea are mixed. one of the reasons I like the idea in general is that it may insulate small box specialty retailers (gamestop in this case) from the big boxification of the U.S. I like being able to go to a game shop. I don't want to be forced into going to the gaming division of target, dicks sports or wal mart. On the other hand being forced into a smaller retail outlet might offput some of the gaming public. Either way... it's bound to happen. If only thanks to Burger King.

shogoh
shogoh

Congratulations on the $7.1 billion made by ripping off people with trade ins. Also, how come EVERY single time I bought a brand new game at their store, they wanted to give me an opened box copy?? I hate that store, how come people still go there?

Crombian
Crombian

@Josepiphus I believe Gamestop/EBGames is already offering exclusive add-on content via X-Box Live for individuals who purchased software specifically from them. What you suggest would seem to be an appropriate, albeit aggressive, next step. As a shareholder, I'd be eager to support the strategy with my dividends in mind. As a principal, I'd be aghast at developing and implementing framework for such a move. As a consumer, I'd be somewhere in the middle with a lean towards reluctance. Seeing as how I only fit into the latter of these classifications, I'd have to advocate against the injection of this particular tactic. The last thing we consumers need is further purchasing limitations. Nevertheless, "+1" for your comment. Insight like yours (and others on this thread) is a refreshing change from what is otherwise a sea of trolling.

Tech-head
Tech-head

09231991, Since when is Kane and Lynch a AAA title lol?

Josepiphus
Josepiphus

Wow. Coming from another industry I must admit to a rather extreme case of industry envy... god I wish the industry I was in was booming like this.. i'd be rich x1000. PREDICTION: I wouldn't be surprised to see gamestop exclusive games in the next couple years. If they took the profit from this year and put a portion of it towards developing 2-3 games that only they could sell they would get at least one good title out of it... possibly more. The effects of this would be a.) Increase traffic at they're retail locations thereby increasing sales b.) make money from said games sales and c.) enhance the brand image by saying "for the gamers by the gamers" or some such nonsense. This type of thing is already going on in other industries. I mean why wouldn't they want to take out the middle man and improve they're margins? btw I enjoy my gamestop...

09231991
09231991

Honestly, who didn't see this coming. With AAA games like COD 4, Assassin's Creed, Mass Effect, Kane & Lynch, Halo 3, Bioshock (and the list goes on) this was pretty much predictable.

dmish82
dmish82

I'm curious how Circuit City & Best Buy will affect Gamestop in the future as I've noticed they have started doing pre-orders on more games and are slowly working on selling used games. The Best Buy by my work sells used games but prices are never updated. Ex: Rainbow Six Vegas sells $30 new. Best Buy's used price...$45.99. lol.

acsguitar
acsguitar

They ripped me off on my "Used" copy of MLB2k8 but I didn't care because I hated it with all my might. Sometimes I'd rather get rid of it quick then make an extra 5 bucks on ebay

HeartBreakKID1
HeartBreakKID1

I have made mistakes in the past when trading my games to Gamestop. That will never happen again lol. But now, I'm older, and much wiser about my gaming purchases. I don't shop at Gamestop anymore, and I shop on Amazon and Ebay now. Gamestop is becoming like McDonalds, because everywhere you look, theyr are wating to steal your money. If anything, I would only shop at Gamestop to buy pre-owned games, thats it. But, sometimes, I can find them cheaper on Amazon/Ebay.

LexLas
LexLas

They make so much money but they close so many of their stores ?

Ghost777
Ghost777

Yet another EBGames supporter. I know Gamestop owns EB but I support my not so local EBgames store. My home is a 30 mile drive to them. There are several closer to me but I love a specific store. Everybody there is really cool, for the most part knowledgeable, and really take care of me. I spend about a 100 bucks a week there on average and they make sure I feel the love in return.

Festin_de_Sang
Festin_de_Sang

To all you whiners complaining about GameStop employees and how dumb they are, when have you ever walked in to any store and not found at least 1 person who did not know what they were talking about, it's not a perfect world, some people are not knowledgeable about certain things, nobody is perfect.

VagrantChild24
VagrantChild24

I haven't had any issues with the store either. Sure sometimes they have issues with preorder fulfillment but that's another topic all together. This is just another boon to the growing industry. By default any store that is solely about games stands a great chance of success with the way the industry is growing as long as they are managed well. As far as the selling and rebuying I see no problem there. As metroidhunter said look at the rental industry. Same way, only then you can even "lose" the game and get it for less than a new copy anyway. It's not gonna change and look for the trend to continue.