GameStop eyes growth strategy with emerging formats

GameStop’s strongest growth in 2015 will have little to do with gaming as the company plans to open between 350 to 550 stores in technology brands segment while paring its GameStop store presence.

The company’s technology brands segment is comprised of 361 ATT&T brand stores, 63 Cricket branded stores that offer wireless products and services and 60 Simply Mac Stores. Meanwhile, the company has indicated it will close 3%, or nearly 200 of its approximately 6,000 traditional video game stores.

The company is reshuffling its real estate portfolio following the release of fourth quarter results that saw mix results from the gaming business. Total global sales for the fourth quarter declined 5.6% to $3.48 billion as mobile and consumer electronics and new software growth was offset by a decrease in new hardware sales.

“In our core video game business, we achieved our highest market share in history with 28% share of next-generation hardware, 46% share of next-generation software and an estimated 42% share of downloadable content,” said GameStop CEO Paul Raines. “Meanwhile, our Technology Brands segment exceeded expectations, contributing 5% to our operating income and to our highest-ever annual gross margin of 29.9%, as we rapidly expanded the footprint of our AT&T wireless and Apple retail businesses. For 2015, we are focused on maintaining and growing market share in physical and digital gaming and, based on their superior returns, expanding our portfolio of Technology Brands by 350 to 550 stores.”

Net earnings on an adjusted basis for the fourth quarter were $235.5 million compared to adjusted net earnings of $222.4 million in the prior year quarter. Adjusted diluted earnings per share were $2.15 compared to adjusted diluted earnings per share of $1.90 in the prior year quarter.