GameStop's Holiday Sales Remain Flat Over Previous Year

Console price cuts, shortages are to blame.

by Jim Reilly

January 7, 2010 - Videogame retailer GameStop reported its 2009 holiday sales results this morning. While the company managed to rake in an impressive $2.86 billion dollars during its nine-week holiday period ending January 2, 2010, total sales remained relatively flat over the previous year. 2008 saw holiday sales reach $2.856 billion, a 22% increase over 2007.

New videogame software sales revenue was up 4%, while hardware sales revenue saw an 8% decline due to console price cuts and lower unit sales.

Chief Executive Officer Daniel DeMatteo said there were several contributing factors that lead to lower sales.

"Despite a kick start to this year's holiday selling season with several major title launches, sales momentum was impacted in December by economic weakness in all global operating segments, winter storms at peak shopping periods in December, and unexpected shortages of key products such as New Super Mario Bros. Wii, Nintendo Wii and Sony's PlayStation 3 consoles," DeMatteo said.

Lazard Capital Markets analyst Colin Sebastian said in a note to investors this morning that competitive pricing from retailers such as Walmart caused GameStop to lose market share.

"While the magnitude of the miss is surprising given positive comments from management on December 11, the variables impacting GameStop's quarter are not surprising, namely more intense competitive price discounting; shift to value-priced new products from used; Nintendo products were on allocation; and the winter storms," Sebastian wrote.

"Due to competitor promotions such as Wal-Mart's $149 Wii sale, we also believe GameStop likely lost some hardware market share over the period."



MovieMiguel.com