How GameStop is Stepping Uphttp://www.fool.com/investing/general/2013/11/09/gamestop-steps-up.aspx Ben Popkin
November 9, 2013
Since 2008, electronics stores have experienced a 38% decline in same store sales. GameStop (NYSE: GME) has had negative same store sales for the past nine quarters, and it has been implementing digital and mobile businesses to keep customers buying games. With the next-generation console launch approaching, the company has the potential to close the year profitably.
Margin power up
While the brick and mortar stores were struggling, the company's digital revenue increased 18% year over year to $158 million thanks in part to exclusive downloadable content. Mobile revenue increased 121% year over year to $55 million. The growth of GameStop's digital and mobile businesses helped increase gross margin 130 basis points to 34.8% during its most recent quarter.
The chart shows that, despite seasonal trends, GameStop's gross profit margin has had continued growth. This shows that the changes that the company has made to drive digital and mobile business are helping it retain more of every dollar earned.
Despite lower same store sales, GameStop beat analyst earnings estimates by $0.02. The company's biggest quarter has yet to happen.
While we don't know for certain which console (*cough* PS4 *cough*) will move the most units, both have sold out of pre-orders for launch day. With these massive launches, game retailers like GameStop and its competitor Best Buy stand to profit from the excitement.