Why Nintendo's Switch Isn't Helping GameStop's Stock

Posted May 26, 2017

GameStop's latest earnings report shows that while profits were down for the global retailer, sales were up - thanks in large part to Nintendo's Switch, which GameStop reports it sold 1.2 million of in the USA during the console's first two months on sale.

Sales of new software dipped by 8.2 percent in contrast to the uptick of new hardware, which increased 24.6 percent to $389.9 million.

"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. Sales were up for year-over-year, thanks in part to what the company described as "robust" sales for the Nintendo Switch. 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.

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GameStop has reported its first quarter earnings, and despite a slight slump on the USA side, the company had a 3.8% overall growth over the same quarter a year ago, with $2.05 billion in sales. Quarterly sales are also up by 39.1 percent to $114.5 million.

Sales at those stores jumped 21.5 percent in the latest quarter but only made up 10 percent of total revenue. "For those fans who are still looking for the Nintendo Switch, don't worry-we're getting more".

GameStop's sales at established stores rose 2.3 percent in the quarter. He also said that "there is a contest among all the retailers, online and in store, with our good friends at Nintendo".

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In an earnings call, GameStop noted that around half of the 53 million members of its PowerUp Rewards loyalty program - which is now 16 percent to 17 percent higher than previous year - had purchased collectibles. In comparison, the first quarter of 2016 saw the release of "Dark Souls 3", "The Division" and "Street Fighter V".

Gamestop has been on record praising the Switch before, saying that stores constantly sell through their stock faster than they can supply them.

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