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Collectibles, New Releases, Nintendo Switch Up GameStop Q3 Profit 17%

21 Nov, 2017 By: Erik Gruenwedel

Strong demand for collectibles, new video games and the Nintendo Switch console contributed to GameStop reporting third-quarter net income of $59.4 million, up almost 17% from income of $50 million during the previous-year period. Revenue increased 1.5% to $1.98 billion.

The nation’s largest video game retailer said collectibles — which includes action figures, T-shirts, posters and related trend items, saw sales increase 26.5% to $138.4 million, driven by continued expansion of licensed merchandise offerings both domestically and internationally. The collectibles category is on track to meet its 2017 revenue target of $650 million to $700 million.

New hardware sales increased 8.8%, led by demand for Nintendo Switch, and new software sales increased 5.4% driven by a strong title line-up. Pre-owned game sales declined 2.4%.

“As we enter the fourth quarter, we are encouraged by the initial customer response to Microsoft’s Xbox One X, and believe that the holiday season results will be driven by new console hardware and collectibles,” Dan DeMatteo, interim CEO, said in a statement.

Mike Hogan, EVP, strategic business & brand development, said the GameStop brand has helped grow the collectibles business, including build vendor, license relationships.

"The current Pokémon Center would be a great example of what really make us unique in the marketplace," Hogan said, adding GameStop has the ability to bundle products and message externally in a way that drives new customers and new traffic into stores.

That said, DeMatteo said technology brands business underperformed in the third quarter primarily due to the later than expected release of Apple’s iPhone X and the previously disclosed change in AT&T’s dealer compensation structure.

“We anticipate that the fourth quarter results will be highly dependent on the availability of iPhone X,” said DeMatteo, who was appointed CEO Nov. 14 after long-time CEO Paul Raines took a leave of absence to deal with a reoccurrence of a previously disclosed medical issue (brain tumor).

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