How's GameStop Doing? Here Are the Key Takeaways From Latest Earnings

Down and up.

Comments

Video game retailer GameStop today reported earnings for its fiscal first quarter ended April 30 (February 1-April 30), and it was a period of growth and decline in different areas.

Total sales dropped 4.3 percent to $1.97 billion, with comparable store sales falling 6.6 percent in the US and 4.9 percent internationally. GameStop said the downturn was partially the result of a 28.8 percent decline in new hardware sales, as well as a difficult comparison to the same quarter in 2015, which saw the release of major games including Grand Theft Auto V for PC, Mortal Kombat X, and Battlefield Hardline. Additionally, Uncharted 4: A Thief's End was supposed to come out in April, but was pushed to May, outside of GameStop's Q1.

No Caption Provided

It's not just GameStop that's hurting when it comes to new hardware sales. According to the NPD Group's report for April 2016, hardware sales are down in the US across the board. In an earnings call, GameStop management explained that a big portion of the downturn in hardware sales for this quarter was due to the fact that the New Nintendo 3DS launched during the same period last year, making for a difficult comparison.

Pre-owned sales also dropped, falling 3.7 percent year-over-year, though no further details regarding why sales dropped off were provided.

GameStop posted a profit of $65.8 million during the quarter, which is down from $73.8 million during the same period last year. Note that this quarter's earnings were affected by one-time charges of $4.1 million and $2.6 million related to GameStop closing all of its stores in Puerto Rico.

On the brighter side, digital sales jumped 16.6 percent to $259 million, led by DLC for The Division. Another positive was GameStop's Mobile and Consumer Electronics category, which saw sales jump 40.8 percent.

The company's Technology Brands, including Simply Mac, Spring Mobile, and Cricket Wireless, posted revenue of $165.8 million (up 62.2 percent) and operating earnings of $18.8 million (up a massive 506.5 percent).

GameStop added 18 new Technology brand stores during the quarter. Overall, GameStop's Technology brands segment contributed 16.5 percent of the company's first-quarter operating earnings.

Another bright spot for GameStop was its "Collectibles" division, which includes physical sales at GameStop stores and money made from ThinkGeek.com. Sales in this area rose 250 percent to $82.3 million, with toys based on Five Nights at Freddy's, Pokemon cards, and Minecraft collectibles leading the way. GameStop acquired ThinkGeek in 2015 for $140 million.

During a post-earnings call, GameStop management said it expects new consoles to be announced at E3 next month.

Got a news tip or want to contact us directly? Email news@gamespot.com

  •   View Comments (0)
    Join the conversation
    There are no comments about this story