This good news comes on the heels of an announcement from Microsoft
Despite these gaming successes, domestic growth has been hard to come by and will not be handed out on a silver platter. GameStop faces some tough competition from the likes of Best Buy
Best Buy announced in July that it plans to court customers into its stores by exchanging old video games for Best Buy gift cards. The second-hand game market has long been GameStop's bread and butter, providing the meatiest gross profits at 46%.
What does this all mean for GameStop going forward?
So far we've seen them be very complacent retiring shares through buybacks. Doing this leaves fewer shares outstanding making year-over-year earnings growth easier to attain. But it fails to address their most pressing need, which is growing revenues in the face of a hiccupping gaming sector.
In order to counter this and stay ahead of Best Buy, GameStop is going to need to step up to the plate and make some sizable acquisitions beyond its recent purchase of Kongregate. The digital delivery gaming market is rapidly growing and GameStop needs to get its foot in the door, otherwise gamers may bypass the brick-and-mortar retailer for point-and-click gaming convenience.
More importantly, GameStop needs to continue to grow its international market share in order to meet its own long-term growth targets.
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Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name UltraLong. Motley Fool Options has recommended writing covered calls on GameStop, buying calls on Best Buy and a diagonal call position on Microsoft. Take-Two Interactive Software is a Motley Fool Rule Breakers recommendation. Best Buy is a Motley Fool Stock Advisor pick. Microsoft and Best Buy are Motley Fool Inside Value recommendations. The Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.