Strong Q4 can’t help GameStop escape downturn; Hardware sales fall sharply

International games retailer GameStop has reported a year-on-year increase in profits from $943.2 to $974.9 for the 14 weeks ending February 2nd.

That’s despite a fall in net sales from $3.579bn in the same period last year to $3.562bn. Operating profit jumped from $302.5m to $412.3m. Net income jumped from $174.3m to $261.1m.

Like-for-like sales for the period fell by 4.6 per cent, although digital sales climbed 60.3 per cent, offsetting what the company described as a weakness” in its core business.

However, the full-year figures aren’t quite as positive. Net sales fell seven per cent from last year’s $9.551bn to $8.887bn while profit fell from $2.680bn to $2.652bn.

Reflecting previous comments about Wii U’s slow start, GameStop’s new games hardware sales for the quarter fell from $626m to $617m. Software sales fell from $1.655m to $1.608m. Even the mighty pre-owned suffers, with second hand games sales falling from $818m to $753m.

Annual like-for-like sales fell eight per cent, with digital climbing 21.2 per cent.

For the year hardware sales fell sharply from $1.612bn to $1.333bn. Software sales fell from $4.048bn to $3.582bn. Pre-owned fell less sharply from $2.620bn to $2.431bn, and now account for 27.4 per cent of all sales.

While 2012 was a challenging year for console gaming, we focused on factors within our control,” CEO Paul Raines stated. We expanded our market leadership position, maintained our financial strength and controlled our spending.

Perhaps most importantly, we invested in our mobile and digital businesses to position the company for future success. These channels delivered as planned and significantly contributed to our highest ever gross margin and profitability.”

Unsurprisingly Raines painted an optimistic picture of the year ahead, with the anticipated arrival of next-gen consoles the potential saviour.

As we look towards the start of the new console cycle, our industry market model indicates a return to growth with the launch of new game systems,” he stated. GameStop is strong, healthy and ready to lead the industry and its customers into the next phase of gaming.”

Nonetheless, GameStop still predicts a Q1 sales decline of between 6-8.5 per cent. It’s annual sales estimates are exceptionally broad, ranging from flat to as much as an eight per cent decline.

Like-for-like sales are expected to decline between 5.5-8 per cent in Q1 and for the year be anything between a sic per cent decline or a 1.5 per cent gain.

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