GameStop Reports Holiday Sales Decline

13 Jan, 2015 By: Erik Gruenwedel

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Game retailer had tough comps with new hardware launches in 2013

GameStop said global holiday sales through Jan. 3 dropped 6.7% (or 4% in constant currency) to $2.94 billion, compared with the prior-year period. Due to the current strength of the U.S. dollar, the company’s sales were negatively impacted by foreign currency exchange rates.

Total same-store sales decreased 3.1%, which included a 3.3% drop in the United States and a 2.7% drop internationally. November’s same-store sales declined 12% when compared with November 2013 when Sony’s PS4 and Microsoft’s Xbox One consoles launched. December same-store sales increased 4.4%.

Indeed, new hardware sales declined 32% (29.8% in constant currency). The decline was largely due to overlapping new console launches from a year ago and lower unit price points this year. Demand for next-generation hardware continues to be strong demonstrated by the 31.3% increase in units sold in December 2014 compared with December 2013.

New software sales grew 5.8% (8.9% in constant currency). The growth was due to a 94.4% increase in PS4 and Xbox One software, led by titles such as Activision’s Call of Duty: Advanced Warfare, Rockstar’s Grand Theft Auto V and Ubisoft’s Far Cry 4.

Digital revenue increased 42.8% (46.4% in constant currency), to $296.6 million. The increase was driven primarily by console sales, which grew more than 50% compared to the prior year period.

Sales in the mobile and consumer electronics category increased 28% (28.6% in constant currency). The growth was driven by a 75.8% rise in technology brands revenue.

Finally, pre-owned software sales dipped 1.3%, but increased 1% (1.3% in the U.S. and flat internationally, in constant currency).

“We expect that trend to continue into the first quarter. Overall, each of our business units performed well giving us positive momentum as we look toward 2015,” CEO Paul Raines said in a statement.

Michael Pachter, research analyst with Wedbush Securities in Los Angeles, said the results exceeded Wall Street expectations.

“Our December industry hardware sales growth estimate of up 9% may be too bullish, but GameStop likely over-indexed last holiday,” Pachter wrote in a Jan. 13 note.

Pachter believes pending December software sales (domestic and non-digital) data from The NPD Group could be up as much as 10%, before taking into account digital game downloads, which he suggests may have contributed an additional 10% or more of growth.

“Positive NPD software sales growth in December should provide a solid sign that the games industry is on the rebound, providing a healthy outlook for publishers and their core franchises,” he wrote.

 

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