GameStop reports record earnings for 2010

GameStop reported its earnings for the fourth quarter and 2010 fiscal year yesterday, and it's a pretty rosy picture for the retailer.

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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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From The Chatty
  • reply
    March 25, 2011 3:00 PM

    Comment on GameStop reports record earnings for 2010, by Steve Watts.

    • reply
      March 25, 2011 3:01 PM

      They've reported their record earnings, but now they're going to buy them back for pennies on the dollar so they can report them at 90% of retail again.

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      March 25, 2011 4:29 PM

      They must have bought the strategy guide on how to run a business.

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      March 25, 2011 4:49 PM

      It's funny how a company that doesn't actually produce something can earn so much. It's one thing to handle perishable or fragile goods transports, but friggin DVD boxes...it would be hilarious to see their reaction if all publishers went 100% digital distribution.

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        March 25, 2011 4:59 PM

        They are a 'value-added' type of company, you WERE going to go and get that game on release day but they added a lot of value by only ordering enough for pre-orders.

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        March 27, 2011 3:11 PM

        Welcome to modern capitalism. Most capital is generated in finance, where no one actually produces a damn thing.

    • reply
      March 25, 2011 11:50 PM

      What digital services does Gamestop even have? I am not aware of any.

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        March 26, 2011 8:01 AM

        PC games, DLC, and strategy guide pdfs.

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        March 26, 2011 9:09 AM

        they even sell psn and xbx live cards so you can purchase and enter code in your console to
        download games

    • reply
      March 26, 2011 9:03 AM

      [deleted]

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      March 26, 2011 3:16 PM

      You would be very surprised about how much they really have.

      GameStop owns Jolt and Kongregate so that's where the digital end comes from, thus user traffic. Same way how you would make money off Google AdSense.

      To be working at one it's stupidly insane how efficient they have become and note it's not off used trade either. To be honest, we live in an age of convenience, hell you can get XBL and PSN cards from 7-11 so it's not just GS that is picking up on the habit and different merchant's carry different cards with different amounts.

      You don't even have to walk into a GS to get a gift card there, some gas stations actually carry them. We actually had to refer people to some 2 years ago because we actually ran out of gift cards.

      The better question is when are people getting a higher pay?

    • reply
      March 28, 2011 3:54 PM

      They will be out of business in less than 10 years. Blockbuster part 2.

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