GameStop reported sales and earnings for the second quarter ended August 1, 2015. Total global sales rose 1.8% to $1.76 billion (a 7.4% increase in constant currency).
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Consolidated global comparable store sales increased 8.1% (+10.8% in the U.S. and +1.8% internationally), successfully overlapping the 25% sales growth and 22% comp achieved in the prior year quarter.
In the video games segments, new hardware sales declined 2.2% (a 3.7% increase in constant currency), new software sales decreased 6% (a 0.7% increase in constant currency), while pre-owned sales increased 0.5% (a 5.1% increase in constant currency) driven by an acceleration in next-gen sales as PS4 and Xbox One trades and inventory become a larger part of the overall pre-owned mix.
Sales in the Mobile and Consumer Electronics category rose 26.9% (a 27.8% increase in constant currency) to $142.2 million, driven by a 62.3% increase in Technology Brands revenues. During the quarter, 182 new Technology Brands stores were opened and/or acquired. As a result, Spring Mobile is now AT&T’s largest authorized reseller.
Strong sales of collectibles products drove a 37.7% increase (a 48.5% increase in constant currency) in the Other category as we continued to expand this new offering around the world.
Non-GAAP digital receipts increased 11.1% (a 17.5% increase in constant currency) to $199.1 million, or $41.6 million of sales on a GAAP basis. Strong sales of DLC for Witcher 3 and Batman Arkham Knight were the primary growth drivers during the quarter.
In the second quarter, as a result of non-recurring costs to complete the Geeknet acquisition and the Technology Brands expansion, the company recorded one-time charges of $9.1 million, $7.8 million net of tax benefits, or $0.07 per share.
Excluding the one-time charges, GameStop’s adjusted net earnings for the second quarter were $33.1 million, a 34.6% increase over the prior year quarter.
The increase was primarily driven by 110 basis points of margin expansion, primarily in the Mobile and Other categories.
Adjusted diluted earnings per share were $0.31, a 40.9% increase over the prior year quarter, exceeding the high-end of guidance by $0.06. Foreign currency exchange rate changes cost nearly $100 million in sales, but had minimal impact on EPS.
Including the one-time charges, GameStop’s second quarter net earnings increased 2.8% to $25.3 million, compared to net earnings of $24.6 million in the prior year quarter. Diluted earnings per share were $0.24 compared to diluted earnings per share of $0.22 in the prior year quarter. ■