GameStop Hardware Sales up 81% On Xbox One And PS4

The retail sector has struggled in the first quarter, however, GameStop GME changed the trend.

Shares have settled more than two percent higher after the company announced the results of its first quarter.

Sales missed the analyst consensus by 1.48 percent, but topped last year’s figure by seven percent at $2 billion. Same-store sales were equally strong at 5.8 percent growth, driven by the release of Microsoft’s Xbox One and Sony’s PlayStation 4. Hardware sales gaped 81.1 percent higher. Conversely, the more sustainable business, software sales, fell 20.4 percent year-over-year.

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Earnings beat Wall Street’s expectation by 3.51 percent and jumped by 28.26 percent from the same quarter a year ago. The massive increase in earnings, despite moderate sales growth, can be attributed to lower depreciation and amortization as a percent of sales and the cost of goods sold, dropping from 69 percent to 68.6 percent of sales.

Looking to the second quarter, GameStop sees same-store sales rising between 12 and 19 percent and EPS to be in a $0.12 to $0.20 range. GameStop maintained its full-year guidance range of $3.40 to $3.70.

CEO Paul Raines commented on the results, “I am pleased to report solid financial and operational results in the first quarter. The next-gen console business is meeting our targets, our digital properties continue to grow and our new tech brands segment is positively contributing to our profitability. As we discussed at our investor day, GameStop is well positioned to use its strengths to achieve growth from its diversified business segments: gaming, mobile, wireless and consumer electronics.”

Shares of GameStop were last up 2.9 percent to $36.88.