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Mobile, CE, Downloads Driving GameStop’s Growth

GameStop said fourth-quarter declines in sales of packaged video games were offset by gains in digital downloads, and by its aggressive forays into mobile, CE and collectibles.

The rising tide of non-core businesses, which include an Apple reseller and pre- and post-paid AT&T chains, has swelled in recent years, suggesting a new face for the world’s No. 1 gaming retailer.

See:GameStop Looks Beyond the Joystick

Net earnings for the period ended Jan. 30 were up 1.5 percent, to $247.8 million, but rose 6.8 percent excluding a $6.6 million charge for shutting its operations in Puerto Rico.

Total sales rose 1.4 percent to $3.5 billion, and increased 5.3 percent excluding the negative impact of currency fluctuations. Worldwide comp sales were up 3.1 percent year over year.

Within gaming:

*New software sales declined by an unspecified amount;

*pre-owned sales were flat, but rose 3 percent in constant currency; and

*sales of downloadable content and mobile digital sales rose 9.7 percent, to $404.5 million, and were up 13.4 percent in constant currency.

For GameStop’s so-called technology brands, including the Simply Mac, Cricket and Spring Mobile chains, segment revenue rose 57.4 percent to $177.9 million and operating earnings increased 69.9 percent to $16.9 million. Driving that growth was the addition of 202 net new stores last quarter, for a total of 1,036 AT&T and Apple reseller locations.

Within GameStop’s new “other” category, comprised of Geeknet/ThinkGeek, a seller of sci-fi and pop-culture collectibles and gadgets, sales grew 77.4 percent, or 85.4 percent in constant currency, as sales of collectibles merchandise increased more than 300 percent year over year. The company ended the quarter with 35 collectibles stores worldwide.

Recounted CEO Paul Raines, “In 2015, the GameStop team achieved several significant milestones in our on-going transformation efforts. The company posted its third straight year of positive comps; exceeded $1 billion in digital receipts; gained market share in our core video game business; and introduced new collectibles products that contributed over $300 million in sales. The company also more than doubled the number of technology brand stores we operate, growing sales to $534 million. These accomplishments drove record gross profit and net income, strong earnings per share growth and an increase in per store profits in our GameStop branded stores for the third straight year.”

Looking ahead, he said, “We are focused on continuing to expand store profit contribution and our diversification efforts, as we build upon our leadership in video gaming.”