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GameStop reports record earnings for 2010

by Steve Watts, Mar 25, 2011 3:00pm PDT

GameStop reported its earnings for the fourth quarter and 2010 fiscal year yesterday, and it's a pretty rosy picture for the retailer. Total sales increased 4.3% for the year, bringing the company to a record $9.47 billion for the year, as compared to $9.08 billion in the year prior.

Net earnings, also known as "the bottom line," were up 8.1%, to $408 million, as compared to $377.3 million in fiscal 2009. Sales of console and PC digital goods saw the healthiest bump at 61%, bringing in $290 million alone.

"In 2010, our innovations in e-commerce, digital offerings and PowerUp Rewards helped drive record sales, earnings and market share," said CEO Paul Raines. Though used game sales still make up roughly the same percent of its overall profits -- 26.1% in fiscal 2010 versus 26.4% in 2009 -- it seems to be digital content that pushed GameStop's profits up this year.

Many perceived moves like EA's "Project $10" program as a shot across the bow to GameStop, but the company shared plans to capitalize on the success of downloadable content last year.

In the fourth quarter alone, during the busy holiday season, total sales increased 4.8% to $3.69 billion. Net earnings increased 10.1% to $237.8 million. That's more than half of the entire year's bottom line in a three-month period, proving once again that the holidays comprise the lion's share of the company's overall profits.

Looking forward to 2011, Paul Raines says GameStop will focus on the PowerUp Rewards program, the used business (for obvious reasons), and digital sales. The company plans to open about 200 new stores in "underserviced markets," while also closing 200 stores in overlapping locations. The company also plans to spend $70 million on new store openings and remodelings, and $100 million on digital initiatives and support for programs like PowerUp Rewards.




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