Destiny: The Taken King Helps GameStop Digital Sales, But Overall Revenue and Profit Fall
Retailer no doubt hoping for a better performance in the holiday quarter.
Video game retail giant GameStop today reported earnings for the quarter ended October 31, revealing a mixed bag of ups and downs. Total global sales fell 3.6 percent to $2 billion, while profit was 55.9 million, compared to $56.4 million during the same three-month period last year.
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New hardware sales dropped 20.4 percent, while new software sales fell 9.3 percent. GameStop partially attributed the yearly downturn to a tough comparison to the same quarter last year, when huge games like Destiny and Super Smash Bros. were released.
GameStop pre-owned sales rose by .6 percent, fueled in part by sales of pre-owned PS4 and Xbox One hardware and games. Not factoring in the impact of foreign exchange rates, this would be the seventh straight quarter in which GameStop's pre-owned business saw positive growth.
Another area of growth for GameStop in the quarter was digital. Sales in this department rose 8.7 percent to $228.6 million. Success here was led by Destiny: The Taken King. GameStop also notes that its digital business is on pace to pass $1 billion during the fiscal year.
The retailer's non-gaming technology brands, such as Cricket Wireless, Simply Mac, and Spring Mobile, posted strong results, with revenue rising 64.2 percent. During the quarter, GameStop opened or acquired 105 new technology brand stores.
GameStop's "Other" division, which includes collectible merchandise from ThinkGeek (which it acquired earlier this year), jumped by 60.8 percent. Collectible merchandise sales are on pace to reach GameStop's goal of $300 million during the fiscal year.
"Our third quarter results were at the low end of our guidance range due to lower-than-expected new software and hardware sales and delays in Technology Brands store openings," GameStop CEO Paul Raines said in a statement. "However, our expectations for the full year have not changed. Looking ahead to the fourth quarter, a solid slate of new video games, coupled with contributions from our diversified AT&T, Apple, and ThinkGeek businesses and our in-store collectibles offerings are expected to drive our fourth quarter results."
It's worth noting that GameStop does a significant portion of its total annual business during the holiday quarter, which is now underway. In addition to sales of new releases this holiday--of which there are many--GameStop's Black Friday deals begin this week. Pre-Black Friday deals start November 24, while it Black Friday proper deals begin November 27.
The retailer will hold an earnings call to discuss these results and answer questions starting at 11 AM EDT. Check back later for more.