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GameStop Sees Record Q1 Profits, Plans For Decline
GameStop Sees Record Q1 Profits, Plans For Decline
May 21, 2009 | By Leigh Alexander

May 21, 2009 | By Leigh Alexander
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    3 comments
More: Console/PC



Console sales are slowing and new software sales are down 2.8 percent -- but with used software sales up 31.9 percent, major specialty retailer GameStop is seeing sales up.

The company's profits were up 13.4 percent to $70.4 million in its first fiscal quarter ending May 2, and total sales were up 9.2 percent to $1.98 billion.

Sales were led by a "very successful" launch of the Nintendo DSi handheld system and strong releases of Capcom’s Resident Evil 5 and Street Fighter IV.

It's not all good news, however. Comparable store sales didn't make expectations -- they declined 1.5 percent "due primarily to sharper recessionary effects in Europe and a slowdown of new console sales that occurred late in the quarter.".

Like recent NPD declines have shown, year-over-year growth comparisons to the launches of Grand Theft Auto IV and Super Smash Bros. are challenging the industry, and GameStop is not immune.

For the current quarter, the company predicts comparable store sales to decline by 8 to 11 percent thanks to the challenging comparison and the continuing decline of new hardware sales.

Despite the retailer's "record" Q1 profits, the Street responded, tumbling the company's shares 12 percent in early trading.

"In the second quarter, like the first, we face very strong comparisons to the prior year period due to the unprecedented number of blockbuster titles released in the first half of 2008 and a significantly more brittle global economy," says GameStop CEO Dan DeMatteo.

"Although new video game software sales declined by 2.8 percent, lower-priced used products grew a robust 31.9 percent, illustrating that value is becoming more important to our customers."


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Comments


Sean Davis
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Once again....Hey DAn DeMAtteo......how bout spreading some of that wealth to the frontline? You know the gameadvisors, Asst Mgrs and Store Mgrs huh? I'm quite sure they would appreciate that in these hard arse times.

Matt Ponton
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I'm sure the developers would also like to see some sort of royalty payment for each used copy they sell, especially since New Game sales have declined (But don't used trade-ins = more new purchases? I could be getting that wrong though).

Jared Kimball
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It's a good thing they're expecting a decline, because after my experience purchasing my Street Fighter 4 game I'll never use them again. What happened? I paid to have my game reserved and on the day it came out they didn't have a copy for me...they said they didn't receive a shipment that day for it...however, a friend of mine at work went on their lunch break...walked in the store and bought it straight off the shelf. I new I had a copy reserved so I waited till I was off work to get it and what do you know...NO SF4!! No apology...no "Here's $5 or $10 off your next purchase"...nothing! I'm now trading and buying my games through amazon.com. I agree with Sean D...spread the wealth with some of their employees.


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