Holiday Sales Kombat: GameStop Wins Boss Battle

If the struggling retail industry needs a cheat code or a walkthrough to make it to the next level, let's make it easy: Start selling video games!

GameStop (NYSE: GME  ) is bucking this morning's trend of bellyaching holiday comps, posting a sharp 10.2% gain in sales at the same-store level through the telltale nine-week period ending on January 3, 2009. Total sales clocked in 22% higher at nearly $2.9 billion, as a result of new store openings stacked on top of the healthy unit-level performance.

You don't have to be a GameStop investor to glean stock tips out of the video game retailer's report. The company is also singling out its five best-selling titles for the period:

  • Call of Duty: World at War
  • Guitar Hero World Tour
  • Gears of War 2
  • World of Warcraft: Wrath of the Lich King
  • Wii Fit

Notice the winning developer? Three of those titles are the handiwork of Activision Blizzard (Nasdaq: ATVI  ) . Microsoft's (Nasdaq: MSFT  ) Gears of War 2 and Nintendo's (OTCBB: NTDOY.PK) balance board-based Wii Fit occupy the other two slots. It isn't the only time that Microsoft and Nintendo got some loving out of GameStop's report. "Hardware sales, led by Nintendo's Wii and Microsoft's Xbox 360, were also robust," claims this morning's press release.

Wii? Xbox 360? How sad must Sony (NYSE: SNE  ) be when its PS3 isn't singled out in a three-horse race? Despite some serious price cuts since its introduction, the PS3 is a fading, distant bronze medalist in an industry has historically been unkind to third-place finishers.

Investors are naturally bidding up GameStop on the news, and rightfully so. I may have some concerns about GameStop's model, but it's clearly a standout in this dreary holiday season. However, savvier investors will pick up on the hints that Activision Blizzard, Nintendo, and Microsoft are also connecting well with diehard gamers. They may also want to avoid software publishers not named Activision Blizzard.

Blockbuster (NYSE: BBI  ) , another retailer that posted robust video game sales a quarter ago, also appears positioned for a healthy showing.

GameStop's report isn't just a walkthrough. It's a survival guide.

Other cheat codes to investing:

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Microsoft is a Motley Fool Inside Value recommendation. Nintendo, GameStop, and Activision Blizzard are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz loves playing video games but he doesn't own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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  • Report this Comment On January 08, 2009, at 2:44 PM, bccm17 wrote:

    Rick...although GME is down with rest of market, it's nice to see that their "model" seems to be working. Digital delivery will be issue, but I like model where revenue, profits, and number of stores are parallel.

    The GME model is why I have held it for nearly 3 years, and suggest the addition of over 900 stores in past 12 months bodes well for at least stable results.

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