Video game retailer GameStop today reported earnings for its fourth quarter and fiscal year ended January 31. While sales were down during the fourth quarter, yearly revenue was up, and–for both periods–digital was yet again a bright spot for the retailer.
In the fourth quarter, total GameStop global sales were $3.48 billion, representing a 5.6 percent decrease compared to $3.68 billion during the same quarter last year. Mobile, consumer electronics, and new software posted gains, but this was offset by a decrease in new hardware sales.
Of course, this was somewhat to be expected. The Xbox One and PlayStation 4 each enjoyed strong launches in November 2013, making November 2014 a tough comparison for GameStop.
GameStop’s digital sales rose 41.4 percent to $368.8 million during the quarter. Growth in this area was led by downloadable content and mobile digital sales, the company said.
Fourth quarter net income was $244.1 million, an increase compared to last year’s profit of $220.5 million.
Switching to the full year, GameStop sales were $9.3 billion, compared to $9.04 billion last year. Consolidated comparable store sales also grew, rising 3.4 percent compared to fiscal 2013. GameStop said these results was primarily bolstered by “better than expected” Xbox One and PS4 sales, as well as growth in the company’s pre-owned business.
Here’s a snapshot of some of GameStop’s full-year financial highlights.
- New hardware sales growth of 17.3 percent
- Digital receipts increased 30.8 percent year-over-year to $947.9 million.
- The mobile and consumer electronics category increased 70.8 percent, led by Spring Mobile expansion
- Pre-owned and value products grew 2.6 percent despite an 11 percent decline in new video game software sales
Total net earnings for the year were $393.1 million, compared to $354.2 million last year.
GameStop CEO Paul Raines offered the following statement regarding the results.
“2014 was a year of continued growth, diversification, and expansion of the GameStop family of specialty retail brands,” he said. “In our core video game business, we achieved our highest market share in history with 28 percent share of next-generation hardware, 46 percent share of next-generation software and an estimated 42 percent share of downloadable content.”
“Meanwhile, our Technology Brands segment exceeded expectations, contributing 5 percent to our operating income and to our highest-ever annual gross margin of 29.9 percent, as we rapidly expanded the footprint of our AT&T wireless and Apple retail businesses. Together, core gaming and Technology Brands drove an 8 percent growth in operating earnings and 16 percent earnings per share growth. For 2015, we are focused on maintaining and growing market share in physical and digital gaming and, based on their superior returns, expanding our portfolio of Technology Brands by 350 to 550 stores.”
While GameStop plans to open more Technology Brands stores (i.e. Spring Mobile, Cricket, SimplyMac), the company said it will close about 3 percent of its video game stores “as part of its ongoing sales transfer initiative.” This won’t be the first time the retailer has shuttered some of its stores.
GameStop will hold a call to discuss these results and answer analyst questions starting at 5 PM EDT. Check back soon for more.
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