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GameStop Ups Same-Store Sales With Collectibles, Tech — Not Video Games

5 Jun, 2017 By: Erik Gruenwedel

In a lagging video game market, GameStop continues to diversify its business portfolio and objectives.

The nation’s largest video game retailer reported a first-quarter (ended April 29) same-store revenue spike of 2.3%, which it attributed to strong sales of collectibles, international revenue and “robust” sales of Nintendo Switch hardware.

When eliminating a 17.1% jump in same-store sales abroad, domestic store sales declined 2.4%. New software sales fell 8.2% to $520.5 million, from $567.2 million, due to the tough overlap from key AAA titles launched last year. Pre-owned game sales dropped 6.2% to $526.2 million, from $561 million, in-line with GameStop expectations.

Collectibles, which include action figures, T-shirts, posters, pins and related items, saw sales increase 39.1% to $114.5 million, from $82.3 million during the previous-year period — driven by strong global sales of Pokémon related products. The company added nine Collectibles stores during the quarter, bringing the total globally to 95 stores.

“Collectibles remains a high-growth area for our company and we're spending a lot of time in this area. The industry is growing and we're well positioned to dramatically expand our market share and reach our goal of it becoming a $1 billion business by 2019,” CEO Paul Raines said on the company's May 25 fiscal call.

GameStop also operates third-party branded stores in its Technology Brands division, which generated 201.4 million in revenue, up from $165.8 million and driven by the year-over-year growth in AT&T authorized retail stores. The company operates 1,508 tech brand stores for AT&T and Apple.

“We will continue to build entertainment competencies into our retail sales teams. We believe the opportunity is tremendous once we're firing on all cylinders,” said Jason Ellis, SVP of technology brands.

Michael Mauler, EVP and president of international, said Sony's large market share globally contributed to strong foreign sales for GameStop.

“The 65% collectibles growth had an impact on same-store sales as well. And so you kind of put all that together and we saw a very strong quarter,” Mauler said.

Interestingly, GameStop said collectibles revenue is growing faster internationally than in the United States.

“By its nature, the collectibles business is a difficult business to scale. And when you're talking about close to 4,000, 3,900 stores in the U.S. scaling out that business, we're behind where the international teams have been, both in terms of our ability to get product, the number of SKUs that they're able to get at scale and the ability to expand within our stores,” said COO Tony Bartel.

“The U.S. is going very quickly and very rapidly. They are expanding the amount of linear footage in the stores to drive that collectibles business and move it up to the international average.”

About the Author: Erik Gruenwedel

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