March 29th, 2013, 00:08 Posted By: wraggster
GameStop saw revenue drop 7% last year, projects flat revenue for 2013 in best case
GameStop reported its earnings for the holiday quarter, and the results were mixed - which investors interpreted as good in a year when retail game sales were down by double digits overall. On the earnings call, CEO J. Paul Raines tried to put the news in the best light possible, of course. Raines had to admit, though, that last year was tough, citing a 21 drop in software sales and a 25 percent decline for hardware from NPD numbers. Of course, Raines was careful to point out that GameStop outperformed against that backdrop. Investors apparently liked what they heard, because GameStop shares were up over 7 percent after the earnings call.
Raines noted that GameStop has over 30 percent software market share in most of the markets, and the company grew its margins by 400 basis points. Outside of the classic physical business, Kongregate grew 48 percent during 2012, and GameStop's mobile division reported $184 million in sales. "We are going to be a strong player in launches of new tablets and devices," Raines claimed.
"We expect the first half of the year to be very difficult as we wait for new consoles"
CFO Rob Lloyd added some detail to the numbers, noting comparable sales for the last quarter were down 4.6 percent when you took into account that the quarter had an extra week. The Wii U launch helped keep the quarter from looking even worse. Overall, the picture for the year wasn't great: A 7 percent sales decline for the year, and business in comparable stores was down 8.7 percent in US. GameStop was able to increase its earnings per share by 10.5 percent despite the grim retail sales picture. The essential question for GameStop's future is this: Will new consoles offset the decline in current generation console sales?
The guidance given for 2013 wasn't rosy. "We expect the first half of the year to be very difficult as we wait for new consoles," Lloyd said. "We expect to return for growth in the back half of the year." Putting numbers on that, Lloyd said that the full year would be down 8 percent to flat, with full year net income declining from 7 to 18 percent. According to Lloyd, the guidance at the high end reflects the possibility of a second new console launch in the fourth quarter other than Sony's PS4. Paging Microsoft; situation desperate, send new console.
For more information and downloads, click here!
There are 0 comments - Join In and Discuss Here