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GameStop Q4 Profit Drops 16%

27 Mar, 2014 By: Erik Gruenwedel

Despite launches of new consoles in the quarter, sales of new video game software, pre-owned and value products, and store traffic declined

GameStop Corp. March 27 reported fourth-quarter (ended Feb. 1) net income of $220 million, which was down about 16% from net income of $265 million during the previous-year period. Sales for the nation’s top video game retailer increased 3.4% to $3.68 billion.

In addition to impairment charges, the quarter was affected by a decline in sales of new and pre-owned games and value products sales. For the fiscal year, sales of new and used games fell 2.8% and 4.1%, respectively. Until the fourth quarter, these two categories had been impacted by limited new title releases and a decrease in store traffic.

Yet, same-store sales increased 7.8% compared with the prior year quarter. The growth was driven by the successful launches of Microsoft’s Xbox One and Sony’s PlayStation 4.

For the full year, digital receipts increased 15% to $724.4 million, or $217.7 million in sales. Mobile and consumer electronics sales, which include technology brands revenue, increased 51.6% over 2012.

The technology brands segment includes Simply Mac, Spring Mobile and Aio Wireless stores. Simply Mac operates 23 stores selling Apple products, including desktop computers, laptops, tablets and smartphones and related accessories. As an authorized Apple reseller, Simply Mac also offers certified training, warranty and repair services to its customers. Spring Mobile sells post-paid AT&T services and wireless products through its 164 AT&T branded stores.

Aio Wireless is a new AT&T brand offering pre-paid wireless services, devices and related accessories. GameStop opened 31 Aio Wireless stores in recent months in select markets throughout the United States.

“The launch of new consoles in 2013 marked the return of innovation to the video game category and GameStop's market share increased to an all-time high,” CEO Paul Raines said in a statement. “Our emerging digital and mobile businesses, which did not exist three years ago, surpassed $1 billion of revenue. As we push forward into 2014, both the re-energized video game category and our new technology brands business unit provide us with solid growth opportunities in the consumer electronics and wireless markets.”

GameStop operates more than 6,600 stores across 15 countries.

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