GameStop profits fall by $5M

GameStop saw its sales jump 5.2 per cent in the three-month period ending November 1st, but profits fell from $52 million to $46.7 million.

The world’s largest games retailer also saw comparable store sales decrease by 1.8 per cent, primarily down to the launch of Halo 3 in September 2007, which was the biggest game launch in the company’s history.

The firm stated that the fall in profits was down to ‘foreign currency fluctuations and merger-related expenses’, and is expecting a strong fourth quarter ‘albeit tempered slightly by the weakness in consumer spending.’

GameStop also reported that new game sales had jumped ten per cent for the period, driven by such as, Madden NFL 2009, Star Wars: The Force Unleashed, Fable II, Wii Fit and Guitar Hero: World Tour.

"Despite the dramatic decline of the global economy and its severe impact on the entire retail industry, GameStop had a strong quarter,” stated CEO Daniel DeMatteo.

Sales have been very robust over the last several weeks, driven by strong new title releases such as Activision’s Call of Duty: World at War and World of Warcraft: Wrath of the Lich King, and Microsoft’s Gears of War 2. We believe that video games provide real entertainment value to consumers in these trying economic times and will be sought out gift purchases for the holiday season.”

Executive chairman R. Richard Fontaine added: "While we are operating through what has been the most unpredictable economic environment in my over 40 years in retail, the GameStop business model has proven to be very resilient. New game sales were strong due in part to the values generated by many of our customers trading in products while older products are being sold at value price points.

"I am pleased to say that during the quarter we negotiated the acquisition of Micromania, France’s largest video game retailer. The final purchase price was reduced to approximately $636 million from the announced $700 million due to foreign exchange rate fluctuations and debt procured to fund the acquisition is projected to be paid off by the end of this fiscal year. We remain committed to using our strong cash flow to continue our global strategy for growth through future new store openings and acquisitions."