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Demand for new consoles drives GameStop earnings growth

Demand for new consoles drives GameStop earnings growth

August 22, 2014 | By Alex Wawro

GameStop seems to have done unexpectedly brisk business in sales of new hardware and software over the last few months, as the company beat analyst expectations to report significant growth in both sales and profits in its most recent earnings report.

The retail company reported $1.73 billion in total global sales for its second quarter ending August 2nd, 2014, roughly 25 percent more than the $1.38 billion in sales it reported in the same quarter a year prior. The company reported $24.6 million of that as profits, up 135 percent from the $10.3 million in profits it reported last year.

Those numbers put GameStop ahead of some analysts, who predicted the company would see about 20 percent growth in sales and a doubling of profits during the quarter.

GameStop continues to benefit from remarkably strong sales of new consoles; the company reported sales of new hardware rose nearly 125 percent year-over-year, to $332.3 million.

Sales of new software at retail rose just over 15 percent from the same period in the prior fiscal year, reaching $497 million for the quarter. This is notable because GameStop has reported significant year-over-year drops in sales of new software in its previous two earnings reports; the company claims its unexpectedly strong performance this quarter is due to high demand for games like Mario Kart 8 and Watch Dogs.

Meanwhile, sales of used hardware and software rose just 5 percent, up to $558 million for the quarter. The company's digital distribution business also saw a slight uptick, rising 5 percent year-over-year to $52.3 million in sales for the quarter.

GameStop's mobile and consumer electronics business continues to grow, rising to $112 million from the $60.6 million it reported in the same fiscal quarter a year prior. That growth is due primarily to its acquisition and expansion of the Spring Mobile and Simply Mac properties.

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