Video game retailer GameStop announced its first quarter 2012 financial results this week, showing that physical retail numbers were down, while used games and digital sales were up. While the company saw a decline in overall net income and sales for the quarter, its reported income was in line with earnings targets.
GameStop's global sales fell 12.2 percent to $2 billion, down from $2.28 billion in the same quarter a year ago. Net income was $72.5 million, down from $80.4 million in Q1 2011. New software accounted for 36.5 percent of the company's sales, with pre-owned coming in at 30.9 percent. Hardware accounted for around 17.4 percent of sales. Digital and mobile sales made up 15.2 percent of all sales. Digital was up 23 percent compared to last year.
"GameStop continues to outperform the market in new game sales through the late stages of this console cycle," said CEO Paul Raines. "Despite slower store traffic during the quarter, we achieved our earnings target due primarily to gross margin expansion and positive profit contributions from our pre-owned, mobile and digital businesses. We expect those segments to fill the profitability gap as we transition to the new console cycle."
Looking ahead to the second quarter of fiscal 2012, GameStop expects store sales between -11.0 percent to -5.0 percent. Diluted earnings per share are expected to range from $0.10 to $0.18. The company said that it maintains previously announced full year diluted earnings per share guidance range of $3.10 to $3.30. Full year comparable store sales are expected to range from -5.0 percent to flat.
Source: Market Watch