GameStop Announces A Fall In Profits

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GameStop’s latest financial results have shown a sales drop of 3.7 per cent on last year - down from $1.80 billion in 2008 to $1.74 billion.

This decrease, Daniel DeMatteo, GameStop’s CEO said, can be attributed to "the effects of the recession and strong prior year comparisons."

"Looking ahead, as the new title release schedule improves, we expect positive earnings growth in the back half of the year," he commented.

Net earnings for the company totalled $38.7 million, which represented the retailer’s second highest summer quarter to date, however it was still a figure 32 per cent down on last year’s earnings of $57.2 million.

Earnings per share were $0.23, compared to $0.34 in the prior year quarter, when earnings per share grew 162 per cent.

The retailer’s top five selling games during the quarter were UFC 2009 Undisputed, Prototype, Fight Night Round 4, NCAA Football 2010 and Ghostbusters, said the report.

Breaking down overall sales though, the report showed that new hardware had dropped 21 per cent this quarter compared to the same quarter last year, and that new videogame software was also down 11 per cent.

Used videogame sales did see an increase however - of 19 per cent on last year, which meant used sales accounted for 32 per cent of GameStop sales. This contrasts to 36 per cent contributed by new game sales.

In terms of profit, used videogame sales accounted for 46 per cent of overall profit, while new games made up just 21 per cent.

The company expects to generate a non-GAAP free cash flow of approximately $400 million - $425 million, which will include investment of $175 million in capital improvements, including the opening of 400 new stores worldwide.

As well as latest performance, GameStop attributed the lowered forecast to the delay of key new titles such as BioShock 2, StarCraft II and Splinter Cell: Conviction. In spite of these challenges however, the retailer said it is expecting an increase in new software sales over the second half of 2009, led by titles such as Call of Duty: Modern Warfare 2, Assassin’s Creed 2 and Halo 3: ODST.

In : PC

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