GameStop Made Nearly $3 Billion in Past 9 Weeks, But Shares Are Tumbling
Video game retailer has a big holiday, but share value falls due to revised earnings projections.
Video game retailer GameStop on Tuesday reported sales results for the all-important holiday period. For the nine-week period ended January 2, GameStop total global sales rose 1.8 percent to $2.99 billion. However, it wasn't all good news, as the store's share value took a dive today (more on that below).
Comparable store sales grew 4.4 percent worldwide (4.9 percent in the US and 3.2 percent internationally), while new hardware sales rose 4.5 percent. GameStop said consumers were "motivated" by the temporary price cuts that both Sony and Microsoft implemented for the PlayStation 4 and Xbox One respectively.
In terms of game sales, PS4 and Xbox One new software sales jumped 38 percent compared to last year. Total new software sales, however, declined 9.7 percent. GameStop attributed the downturn in part to fewer Nintendo games released and declines for Xbox 360 and PlayStation 3 game sales.
GameStop's secondhand business overall dipped 0.3 percent. Sales of preowned software in the US, however, posted big gains, increasing by more than 50 percent.
Another bright spot for GameStop during the holiday period was its digital channel. Digital sales rose 9.8 percent to $325.6 million and are on pace to reach $1 billion for the fiscal year, GameStop said. The uptick in digital revenue this year was attributed in part to strong DLC sales and contributions from Kongregate.
Sales from the retailer's non-gaming technology brands, which include Spring Mobile, grew by 59.9 percent, helping GameStop's Mobile & Consumer Electronics business jump 17.7 percent. The top-sellers in this category included the iPhone 6s, the Apple Watch, and Beats headphones.
GameStop's Other category, which includes ThinkGeek, saw its sales rise by 80.4 percent. Revenue from collectible toy sales jumped by a massive 300 percent, fueled in part by the Funko Mystery Box and the BB-8 droid toy.
As part of GameStop's holiday sales announcement today, the retailer also updated its Q4 and full-year guidance, announcing that it expects earnings per share for both periods to be a few cents lower than its previous forecast. This news didn't sit well with investors, apparently, as GameStop shares dove by more than 10 percent today, though they are now rebounding.
GameStop's CEO Paul Raines will hold a briefing later this afternoon. Check back later for more.
In other GameStop news, the retailer announced this week that it's closing all of its stores in Puerto Rico.