GameStop Reports 10 Percent Increase in Net Income

GameStop is reporting a 10 percent increase in net income for the fourth quarter of 2010, citing robust holiday sales of hardware and accessories such as Kinect. Fourth-quarter net income was $237.8 million, up from $215.9 million in the same period a year ago. Quarterly revenue was up 6 percent to $3.69 billion.

Sales of new game hardware accounted for 21.2 percent of GameStop's overall revenue, up from 20.9 percent in the fourth quarter of the previous year. Hardware contributed 7.2 percent to overall gross profit, compared to 5.5 percent in 2009. Used games accounted for 21.8 percent of total net sales and 44.2 percent of gross profit.

GameStop projects that Q1 revenue will rise 6 - 8 percent, with earnings of around 53 - 55 cents. Analysts predicted around 51 cents a share. The company said that it will continue to invest in its digital business, including services such as in-store game cards for downloadable content as well as its PowerUp Rewards program. It expects to spend $100 million to expand digital initiatives in the current fiscal year.

Source: Market Watch