Nintendo Switch and Pokémon bolster GameStop's first quarter

Lena Tucker
May 26, 2017

GameStop Corp, the world's largest retailer of video games and gaming consoles, reported better-than-expected quarterly profit and sales on Thursday, driven by robust demand for the Nintendo Switch console.

Sales at GameStop's mainstay videogame retail business continued to fall, with new videogame sales declining 8.2% to US$520.5mil (RM2.22bil) in the first quarter.

"Our focus will continue to be executing our diversification strategy, exercising cost discipline, and increasing our share in the video game market", the company said in a release.

Bartel attributed part of the decline in US same-store sales to a tight supply in the Switch in the first quarter. The Switch may be popular now, but it's not a long-term fix, and investors don't seem to have much faith in the company's future as a hodgepodge of unrelated retail outlets. But GameStop posted a surprise 2.3 percent rise in sales at established stores, compared with analysts' average expectation of a 3.6 percent decline, according to research firm Consensus Metrix. "But we haven't seen supply even come close to catching demand at this point", added company chief Tony Bartel, who said he believed the Switch's popularity would drive both game trade-ins and game sales at GameStop stores. The increase was led by the launch of the Nintendo Switch, which was released back in March.

Sales at those stores jumped 21.5% in the latest quarter but only made up 10% of total revenue. He also said that "there is a contest among all the retailers, online and in store, with our good friends at Nintendo".

But the company's shares fell 6.2 percent to $22.15 in trading after the bell after GameStop maintained its full-year profit forecast. GameStop said that decline is due to "tough overlap" with games released during the same period previous year, which included releases such as Dark Souls III, The Division, and Street Fighter V.

Nintendo has noted that the console has sold 2.74 million units worldwide in April, with more than double that sold in software sales.

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