GameStop Reports 2013 Holiday Sales Results

Gamestop Corp. (GME), today reported sales results for the nine-week holiday period ended January 4, 2014.

Total sales were $3.15 billion, a 9.3% increase compared to the 2012 holiday sales period. Total comparable store sales increased 10.2%, with U.S. comps of +7.1% and international comps of +17.4%. Sales were driven by new video game console sales as demonstrated by the 99.8% increase in new hardware sales.

Paul Raines, CEO, stated, "I am pleased that the extensive planning by our entire team to prepare for the new console launches paid off. Our outstanding execution resulted in GameStop securing number one market share in the U.S. and in most of the countries in which we operate today. GameStop also had the highest software and accessory attach ratio of any retailer for both new consoles. We are in an excellent position to drive the global adoption of the next generation of new video game products in 2014.”

During this transitional console period, strong sales of next generation software were offset by a greater than expected decline in previous generation software sales resulting in a 22.5% decline in the new software category. The pre-owned category increased 7.0%, driven by a stronger in-stock position and by the sale of previous generation consoles. Gross margins for the pre-owned category are expected to range from 46% to 49% for the fourth quarter and the fiscal year.

Other category sales increased 4.8%. Within this category, digital receipts were $207.3 million, an increase of 14.9%, and mobile revenues increased 23.8% to $94.8 million and now include GameStop’s new technology brands (Spring Mobile, Simply Mac and Aio Wireless).

GameStop’s multichannel sales grew 57%. Broken down by type, sales through GameStop’s mobile site increased 47%, web-in-store and pick-up at store sales combined increased more than 120% and e-commerce sales increased 37%. Additionally, total site traffic ranked in the top 20 of all online retailers.

Rob Lloyd, CFO, commented, "The higher percentage of sales in the hardware category resulted in better than expected comps, but lower gross margin dollars. Additionally, new software sales came in below our expectations. Based on these results, GameStop now expects its fourth quarter and full year 2013 same store sales to be at the high end of the current guidance range and fourth quarter earnings per share to be in a range of $1.85 to $1.95 and full year earnings per share to be in a range of $2.96 to $3.06.”

GameStop repurchased 800,500 shares of common stock, or $39.5 million worth of stock. As of the end of the holiday period, the company had approximately $467.1 million remaining of its current share repurchase authorization.

The full release, including financial statements, can be accessed at http://investor.GameStop.com/.