GameStop (NYSE: GME ) and Best Buy (NYSE: BBY ) proved that you can never leave an out-of-favor retailer for dead. Both chains saw their stocks tick higher on Thursday after posting quarterly results.
GameStop's report was worthy of applause. Earnings per share soared a better-than-expected 28% on a 7% uptick in sales. The release of the Xbox One and PS4 late last year continued to deliver strong hardware sales, and that was more than enough to offset a surprisingly steep 20% drop in software sales.
The key winning factor for GameStop turned out to be that sales of preowned games improved during the period. That's pretty important, since buying trade-ins for a pittance and marking them up for resale after cleaning them up is the small-box retailer's highest margin business. It accounts for less than a third a of sales but nearly half of its gross profit.
Best Buy's stock also moved higher, but that report wasn't exactly worthy of a standing ovation. Sales fell short of Wall Street estimates as comps ticked lower again. The near term won't get any easier, with Best Buy forecasting negative comps through at least the next two quarters. The one silver lining is that margins improved to the point where it blasted through analyst profit estimates. That's huge, but it's still not much of a consolation if Best Buy can't woo back shoppers.
Briefly in the news
And now let's look at some of the other stories that shaped our week.
- Renren (NYSE: RENN ) continues to fade in China. The once promising social-networking website operator posted a nearly 40% plunge in revenue in its latest quarter. The one saving grace is that Renren is now trading for barely more than the value of its cash and investments. .
- Tesla Motors (NASDAQ: TSLA ) may be making more cars, but it's not having a problem selling them. Its website is now accepting orders for cars to be delivered in late September. The four-month wait is longer than three months that has been the case recently.
- CommVault Systems (NASDAQ: CVLT ) announced that its Simpana 10 enterprise software is being deployed by IT managed solutions provider UbiStor. CommVault shares took a hit a month earlier on decelerating and weaker-than-expected top-line growth, so the incremental boost is clearly welcome.
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