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GameStop a winner despite sales drop?


The strength of the U.S. dollar and a decline in hardware sales are among the reasons GameStop cited for its decline in holiday sales. But that's not the whole story.

Sales of new software, a key category for the video game retailer, were strong. New software sales increased 5.8%, or 8.9% in constant currency. The growth was driven by a 94.4% increase in PS4 and Xbox One software, led by titles such as Activision’s Call of Duty: Advanced Warfare, Rockstar’s Grand Theft Auto V and Ubisoft’s Far Cry 4.

The video game retailer said sales during the November-December holiday period declined 6.7%, but the retailer attributed more than a third of that decline to the strength of the U.S. dollar. It also attributed sales declines to a 30% drop in new hardware sales due to no new consoles from Microsoft and Sony being launched (unlike in the previous year).

“During the holiday period, consumer demand for video games was strong, resulting in new software sales growth,” said GameStop CEO Paul Raines. “We expect that trend to continue into the first quarter. Overall, each of our business units performed well giving us positive momentum as we look toward 2015.”

Based on the holiday sales results, GameStop is reiterating its previously announced fourth quarter and full year earnings per share guidance ranges of $2.08 to $2.24 and $3.40 to $3.55, respectively. GameStop now expects comparable store sales for the fourth quarter and the full year to range from -2.5% to -1% and 3% to 4%, respectively.

GameStop operates more than 6,600 stores across 14 countries.

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