GameStop rakes in $7.1B in '07

By Tor Thorsen, GameSpotPosted Mar 18, 2008 11:37 am PT

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.

257 Comments

  • Masterdj1992

    Posted Mar 31, 2008 10:53 am PT

    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

    Posted Mar 24, 2008 12:37 pm PT

    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

    Posted Mar 21, 2008 11:41 pm PT

    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

    Posted Mar 21, 2008 10:30 am PT

    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

    Posted Mar 20, 2008 4:00 pm PT

    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

    Posted Mar 20, 2008 2:16 pm PT

    "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

    Posted Mar 20, 2008 1:42 pm PT

    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

    Posted Mar 20, 2008 11:58 am PT

    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

    Posted Mar 20, 2008 9:15 am PT

    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

    Posted Mar 20, 2008 8:56 am PT

    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

  • Sins-of-Mosin

    Posted Mar 20, 2008 7:03 am PT

    I bought my PS2 used, suck it Sony.

  • Doeshza

    Posted Mar 20, 2008 5:41 am PT

    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

    Posted Mar 20, 2008 5:37 am PT

    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.

  • go-cizmek

    Posted Mar 20, 2008 2:40 am PT

    That's a lot of money.

  • go-cizmek

    Posted Mar 20, 2008 2:39 am PT

    That's a lot of money.

  • nomadski69

    Posted Mar 20, 2008 2:19 am PT

    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

    Posted Mar 20, 2008 1:17 am PT

    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

    Posted Mar 19, 2008 11:31 pm PT

    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

    Posted Mar 19, 2008 11:24 pm PT

    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

    Posted Mar 19, 2008 9:54 pm PT

    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.

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