GameStop Profits from New Console Launches

GameStop announced their Q4 2013 earnings on Thursday, covering the period ending February 1st, 2014. GameStop boasted a 3.4% increase over the prior year’s gross sales figures, $3.68 billion dollars versus the prior year’s $3.56 billion dollars. GameStop attributed the sales volume increase to the high-profile launch of the Playstation 4 and Xbox One during the quarter.

In spite of the boost in sales, however, GameStop was less profitable, only generating $220.5 million in net earnings for Q4 compared to the previous year’s $261.1 million, likely due to the reduction in value of their existing stock of Xbox 360 and Playstation 3 hardware and a $49.5 million stock buyback.

In their financial analysis of the entire year, GameStop noted a 2.8% drop in used game sales and a 4.1% drop in overall game sales, but attributed the sales drop to the lull before a new console cycle, predicting a significant improvement for FY 2014 in those categories even though the new consoles both prominently feature digital purchases.

GameStop also announced their intent to close 2% of their retail locations during FY 2014. 2% doesn’t sound like much, but that’s over 100 of their 6000+ stores and likely to put 300 employees out of work.

Although not emphasized in the report, GameStop also reported a 25% boost in sales of their non-gaming-specific consumer electronics in Q4 2013 and a 50% boost across all of 2013, a market which seems increasingly likely to be a focus for GameStop out of sheer concern concern for the growing digital marketplace on new gaming hardware.

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