In November, Sony and Microsoft launched their next generation games consoles - the PS4 and Xbox One. Both consoles have now gone on to sell more than 7 million units combined and that's definitely helping the bottom line of those in the business of selling games. The increase in hardware sales was readily apparent at GameStop during the holidays.
GameStop announced today that it had made $3.15 billion during the nine week holiday period that ended on January 4. The retailer notes that it saw a 9.3 percent increase in revenue compared to last year's holiday sales period. One of the reasons for this increase was the emergence of next-gen hardware.
“I am pleased to report that the extensive planning by our entire team over the past year to prepare for the new console launches paid off," said Paul Raines, GameStop CEO. "Our outstanding execution during the holidays resulted in GameStop securing the number one market share position 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. Building off this momentum, we are in an excellent position to drive the global adoption of the next generation of new video game products in 2014.”
Of course, not everything was rosy for GameStop during the holiday season. The retailer saw a decline in Xbox 360 and PS3 software sales thanks in part to strong sales of next-gen software. Sales of new current-gen software saw a decrease of 22.5 percent while used software grew by 7 percent.
As for GameStop's other businesses, there was growth across the board. It's digital business brought in $207.3 million, an increase of 14.9 percent over the previous holiday season. It's mobile business brought in a respectable $94.8 million, an increase of 23.8 percent.
“Clearly, same store sales were driven by very strong growth in new hardware," said Rob Lloyd, GameStop CFO. "The higher percentage of sales in the hardware category resulted in better than expected comps, but lower gross margin dollars during the holiday selling period. In addition, 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.”
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