A mixed holiday bag for GameStop

GameStop reported increases in global and same-store sales for the nine-week holiday sales period ended Jan. 4, but results missed analysts’ expectations thanks to a greater-than-expected decline in sales of new game titles for Xbox 360 and PlayStation 3.



Total global sales for the period were $3.15 billion, a 9.3% increase compared to the 2012 holiday sales period. Total comparable store sales increased 10.2%, with U.S. comps of more than 7.1% and international comps of more than 17.4%. Comparable store sales were driven by Xbox One and PlayStation 4 console sales, as demonstrated by the 99.8% increase in new hardware sales.



But the new software category suffered a 22.5% decline during the transitional console period, as strong sales of next-generation software were offset by a greater-than-expected decline in Xbox 360 and PS3 software sales — which, according to Reuters, sent the company’s shares down 12%.



“I am pleased to report that the extensive planning by our entire team in the past year to prepare for the new console launches paid off,” said CEO Paul Raines. “Our outstanding execution during the holidays resulted in GameStop securing the number one market share position in the U.S. and in most of the countries in which we operate today. GameStop also had the highest software and accessory attach ratio of any retailer for both new consoles. Building off this momentum, we are in an excellent position to drive the global adoption of the next generation of new video game products in 2014.”



The pre-owned category increased 7%, driven by a stronger in-stock position and by the sale of value-priced previous generation consoles. Gross margins for the pre-owned category are expected to range from 46% to 49% for the fourth quarter and the fiscal year.



The Other category sales increased by 4.8%. Within this category, digital receipts were $207.3 million, an increase of 14.9%, and mobile revenues increased 23.8% to $94.8 million and now include GameStop’s new technology brands (Spring Mobile, Simply Mac and Aio Wireless).



GameStop’s global multichannel sales (mobile, web-in-store, pick-up at store, e-commerce) grew 57% compared to the 2012 holiday period as customers utilized multiple ways to purchase video game products. Broken down by type, sales through GameStop’s mobile site increased 47%, web-in-store and pick-up at store sales combined increased by more than 120% and sales on www.gamestop.com increased 37%. During the holiday selling period, total site traffic ranked in the top 20 of all online retailers.



“Clearly, same store sales were driven by very strong growth in new hardware. The higher percentage of sales in the hardware category resulted in better than expected comps, but lower gross margin dollars during the holiday selling period,” added CFO Rob Lloyd. “In addition, new software sales came in below our expectations. Based on these results, GameStop now expects its fourth quarter and full year 2013 same store sales to be at the high end of the current guidance range and fourth quarter earnings per share to be in a range of $1.85 to $1.95 and full year earnings per share to be in a range of $2.96 to $3.06.”