Next generation software sales grew 94%
compared to the 2013 holiday period
Digital receipts increased 43%
Fourth quarter & full year EPS guidance
reiterated
GameStop Corp. (NYSE: GME), a family of specialty retail brands
that makes the most popular technologies affordable and simple,
today reported sales results for the nine-week holiday period ended
January 3, 2015.
Total global sales for the holiday period were $2.94 billion, a
6.7% decline compared to the 2013 holiday sales period, or -4.0% in
constant currency. Due to the current strength of the U.S. dollar,
the company’s sales were negatively impacted by foreign currency
exchange rates as described in this release.
Total comparable store sales decreased 3.1%, comprised of -3.3%
in the U.S. and -2.7% internationally. By month, November’s
comparable store sales declined 12.0% as the company overlapped
last November’s PS4 and Xbox One console launches, while December’s
comparable store sales increased 4.4%.
Paul Raines, chief executive officer, stated, “During the
holiday period, consumer demand for video games was strong,
resulting in new software sales growth. We expect that trend to
continue into the first quarter. Overall, each of our business
units performed well giving us positive momentum as we look toward
2015.”
New software sales grew 5.8%, or 8.9% in constant currency. The
growth was driven by a 94.4% increase in PS4 and Xbox One software,
led by titles such as Activision’s Call of Duty: Advanced Warfare,
Rockstar’s Grand Theft Auto V and Ubisoft’s Far Cry 4.
Sales of new hardware declined 32.0%, or 29.8% in constant
currency. The decline was primarily attributable to overlapping
last year’s new console launches and lower unit price points this
year. Demand for next generation hardware continues to be strong
demonstrated by the 31.3% increase in units sold in December 2014
compared to December 2013.
The pre-owned/value category decreased 1.3%; however, it
increased 1.0%, +1.3% in the U.S. and flat internationally, in
constant currency.
Sales in the mobile & consumer electronics category
increased 28.0%, or 28.6% in constant currency. The growth was
driven by a 75.8% rise in Technology Brands revenues.
Non-GAAP digital receipts increased 42.8%, or 46.4% in constant
currency, to $296.6 million, or $53.2 million of sales on a GAAP
basis. The increase was driven primarily by console digital sales,
which grew more than 50% compared to the prior year period.
Capital Allocation
Update
During the holiday period, GameStop repurchased 1.23 million
shares of common stock at an average price of $38.62, or $47.5
million worth of stock. As of the end of the holiday period, the
company had approximately $461.5 million remaining of its current
share repurchase authorization.
Guidance Update
Based on the holiday sales results, GameStop is reiterating its
previously announced fourth quarter and full year earnings per
share guidance ranges of $2.08 to $2.24 and $3.40 to $3.55,
respectively. GameStop now expects comparable store sales for the
fourth quarter and the full year to range from -2.5% to -1.0% and
3.0% to 4.0%, respectively.
About GameStop
GameStop Corp. (NYSE: GME), a Fortune 500 and S&P 500
company headquartered in Grapevine, Texas, is a global,
multichannel video game, consumer electronics and wireless services
retailer. GameStop operates more than 6,600 stores across 14
countries. The company’s consumer product network also includes
www.gamestop.com; www.Kongregate.com, a leading browser-based game
site; Game Informer® magazine, the world’s leading print and
digital video game publication; and www.buymytronics.com, an online
consumer electronics trade-in platform. In addition, our Technology
Brands segment includes our Simply Mac, Spring Mobile and Cricket
stores. Simply Mac, www.simplymac.com, operates 60 stores, selling
the full line of Apple products, including laptops, tablets, and
smartphones and offering Apple certified warranty and repair
services. Spring Mobile, http://springmobile.com, sells post-paid
AT&T services and wireless products through its 358 AT&T
branded stores. Cricket Wireless, www.cricketwireless.com, offers
pre-paid wireless services, devices and related accessories. We
operate 63 Cricket stores in select markets throughout the United
States.
General information about GameStop Corp. can be obtained at the
company's corporate website. Follow GameStop on Twitter @
www.twitter.com/GameStop and find GameStop on Facebook @
www.facebook.com/GameStop.
Non-GAAP Measures
As a supplement to our financial results presented in accordance
with U.S. generally accepted accounting principles (GAAP), GameStop
uses certain non-GAAP measures, such as digital receipts and
constant currency, to provide a clearer perspective of the current
operating performance of the company. GameStop defines digital
receipts as the full amount paid by the customer for digital
content at the time of sale and/or the value attributed to digital
content when physical and digital products are sold combined.
Results reported as constant currency exclude the impact of
fluctuations in foreign currency exchange rates by converting our
local currency financial results using the prior period exchange
rates and comparing these adjusted amounts to our current period
reported results. Our definition and calculation of constant
currency information may differ from that of other companies.
Non-GAAP financial measures should be viewed in addition to, and
not as an alternative for, the company's reported GAAP financial
results.
Safe Harbor
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements may include, but are not limited to, the
outlook for the fourth quarter and fiscal 2014, future financial
and operating results, projected store openings, the company's
plans, objectives, expectations and intentions, and other
statements that are not historical facts. Such statements are based
upon the current beliefs and expectations of GameStop's management
and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking
statements. GameStop undertakes no obligation to publicly update or
revise any forward-looking statements. The following factors, among
others, could cause actual results to differ from those set forth
in the forward-looking statements: the inability to obtain
sufficient quantities of product to meet consumer demand, including
console hardware and accessories; the timing of release and
consumer demand for new and pre-owned video game titles; the risks
associated with international operations, wireless industry
operations and the integration of acquisitions; the impact of
increased competition and changing technology in the video game
industry, including browser and mobile games and alternative
methods of distribution; and economic, regulatory and other events,
including litigation, that could reduce or impact consumer demand
or affect the company’s business. Additional factors that could
cause GameStop's results to differ materially from those described
in the forward-looking statements can be found in GameStop's Annual
Report on Form 10-K for the fiscal year ended Feb. 1, 2014 filed
with the SEC and available at the SEC's Internet site at
http://www.sec.gov or http://investor.GameStop.com.
Schedule I GameStop Corp. Sales Mix
9 Weeks Ended 9 Weeks Ended Jan. 3,
2015 Jan. 4, 2014 Percent Percent
Sales of Total Sales of Total Net Sales
(in millions): New video game hardware $ 713.0 24.2 % $
1,048.2 33.3 % New video game software 1,143.0 38.9 % 1,080.4 34.3
% Pre-owned and value video game products 560.0 19.0 % 567.3 18.0 %
Video game accessories 216.7 7.4 % 204.7 6.5 % Digital 53.2 1.8 %
51.1 1.6 % Mobile and consumer electronics 132.1 4.5 % 103.2 3.3 %
Other 122.4 4.2 % 95.0 3.0 % Total $
2,940.4 100.0 % $ 3,149.9 100.0 %
Matt HodgesVP, Public & Investor RelationsGameStop
Corp.817-424-2130
GameStop (NYSE:GME)
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