GameStop’s Gambit: Innovate Faster Than the Market

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Source: http://www.flickr.com/photos/nyctrip/

Source: http://www.flickr.com/photos/nyctrip/

GameStop Corp. (NYSE:GME) sweat some value on Thursday morning after the game retailer reported fourth-quarter and year-end results that didn’t quite match analyst expectations.

Total global sales increased 3.4 percent on the year in the fourth quarter to $3.68 billion, below the mean analyst estimate of $3.79 billion. Consolidated comparable store sales increased 7.8 percent on the year, a jump that was primarily driven by the launches of Microsoft’s (NASDAQ:MSFT) Xbox One and Sony’s (NYSE:SNE) PlayStation 4. For the year, sales increased 1.7 percent to $9.04 billion, below the mean analyst estimate of $9.15 billion.

“The launch of new consoles in 2013 marked the return of innovation to the video game category and GameStop’s market share increased to an all-time high,” said GameStop Chief Executive Paul Raines. GameStop has capitalized on its neutral position in the console wars between Microsoft and Sony, which have done much of the heavy lifting required to mobilize consumers.

“Our emerging digital and mobile businesses, which did not exist three years ago, surpassed $1 billion of revenue. As we push forward into 2014, both the re-energized video game category and our new Technology Brands business unit provide us with solid growth opportunities in the consumer electronics and wireless markets,” Raines added.

That Technology Brands segment includes Simply Mac, Spring Mobile, and Aio Wireless stores. Simply Mac does what its name suggests and acts as a retail and service station for Apple (NASDAQ:AAPL) products, while Spring Mobile and Aio Wireless do the same for AT&T (NYSE:T) post-paid and pre-paid products and services, respectively.

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