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Despite faltering profits, hardware and software sales rise at GameStop

Despite faltering profits, hardware and software sales rise at GameStop

March 29, 2018 | By Alissa McAloon

GameStop has detailed its financial results for the final quarter of the 2017 fiscal year, noting specifically that the Nintendo Switch helped drive a healthy increase in hardware sales during the quarter. 

For the quarter ending February 3, 2018, the retail giant noted that new hardware sales increased 44.8 percent when compared to the fourth quarter of 2016, growth that it attributes to the continued strength of Nintendo’s part-time portable home console.

Strong Switch sales have been somewhat of a recurring theme during GameStop’s 2017 fiscal year, and the company notes that software sales also saw a year-over-year jump this quarter thanks in part to the Switch and Call of Duty WWII, increasing by 12.4 percent and building on a similar upswing from Q3.

For the fourth quarter as a whole, GameStop’s global sales came in at $3.5 billion, increasing by 15 percent (or 12.3 percent in constant currency) year-over-year. Of that, however. the company reported a net loss of $109.8 million for the quarter, compared to $208.7 million in profit during the same period last year.

That trend reappeared for the company’s full-year 2017 financial report. GameStop reported $9.2 billion in sales for the year ending February 3, up from $8.6 billion the year before, but noted profits of only $34.7 million, down from $353.2 million in 2016, citing the reason for that decline as asset impairments in late 2017.

In an earnings call, GameStop heads explained that changes to compensation agreements with AT&T, contributed to those impairments, but the company leadership is hopeful that upcoming renegotiations of those terms will produce better results in the long term.

"First, we will be taking a pause on investing in new businesses and acquisitions and focus on the fundamentals of fixing the businesses that we already have," said GameStop CEO Michael Mauler in that call. "We have three core profitable businesses: video games, collectibles, and technology brands. And once these businesses are operating at the level that I know they can achieve, we can then explore other opportunities to drive shareholder growth."

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