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GameStop Sales Hurting, as New Call of Duty Underperforms; Pokemon Sun/Moon Biggest of 2016

The retailer saw its revenue and profit decrease year-over-year.


[UPDATE] Here are some of the takeaways from GameStop's earnings call, based on comments made by management:

  • Pokemon Sun and Moon are the best-performing games for GameStop all year; preorders for the game were the highest for any game at GameStop in five years.
  • Call of Duty: Infinite Warfare underperformed, though specifics were not shared
  • PS4 Pro is off to a "strong" start, while PSVR units are selling well, as they only stay on shelves for an average of 10 days.
  • 27 percent of GameStop's PowerUp Rewards members who are aware of the Nintendo Switch plan to buy the console. This pre-launch purchase intent metric is in line with that of the Xbox One at a similar point in time. The figure could go higher after Nintendo's Switch news event in January.

The original story is below.

GameStop today reported earnings for the quarter ended October 29, and the results were not what the retailer would have wanted. The store reported total global sales of $1.96 billion, a decrease of 2.8 percent year-over-year. As GameStop said in its preliminary sales announcement, games released in the "last few weeks of October" underperformed, with new software sales dropping by 8.6 percent.

No specific titles were mentioned, but Gears of War 4, Battlefield 1 (October 21), Civilization VI (October 21), Titanfall 2 (October 28), Skyrim Special Edition (October 28), would be considered high-profile games that came out at the end of October. For Titanfall 2, EA management recently suggested that first-day and first-week sales were not extraordinary. One analyst said Titanfall 2's sales would be "substantially disappointing" in part because the game's release was sandwiched between Battlefield 1 and Call of Duty: Infinite Warfare (November 4).

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Pre-owned game sales slid 6.4 percent. On the hardware side, this was a tough quarter for GameStop, as new hardware sales dropped by 20.6 percent. Hardware sales dropped across the industry in October, so this doesn't appear to be a problem that's specific to GameStop.

On the brighter side for GameStop was its digital business, which saw revenue rise 13.2 percent to $258.9 million. Growth in this area was driven by DLC, digital currency, and mobile game sales. GameStop's mobile sales specifically benefited from the launch of Animation Throwdown: The Quest for Cards, a smartphone game that brings together characters from Fox shows like Family Guy, King of the Hill, and American Dad.

Elsewhere, GameStop's Technology Brands division saw its sales rise 54.4 percent to $216.3 million, while the company's Collectibles unit posted $109.4 million in revenue, up 37.3 percent. Sales in this category were led by Pokemon and Five Nights at Freddy's toys.

Overall, GameStop posted a profit of $50.8 million for the quarter, down from $55.9 million.

Looking ahead to the all-important holiday quarter, Gamestop said it expects store sales to be down, ranging from -12 percent to -7 percent.

Last year, GameStop reported that Halo 5: Guardians, Star Wars Battlefront, and Assassin's Creed Syndicate all performed below the company's expectations. For what it's worth, games sales across the industry improved in October, so it looks like GameStop is uniquely affected.

GameStop will hold an earnings call to discuss these results and more starting at 2 PM PT / 5 PM ET. We'll update this post or write a new story if anything noteworthy comes up during the talk.

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