GameStop reported sales and earnings for the third quarter ended October 31, 2015. Total global sales decreased 3.6% to $2 billion (a 1.2% increase in constant currency).
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Consolidated global comparable store sales declined 1.1% (-1.7% in the U.S. and +0.3% internationally).
Foreign currency exchange rate changes negatively impacted sales by approximately $100 million and earnings per share by $0.02.
In the new video game segments, new hardware sales declined 20.4% (a 15.4% decrease in constant currency), while new software sales decreased 9.3% (a 4.2% decrease in constant currency) due to the tough overlap of Destiny and Super Smash Bros. in Q3 2014.
Pre-owned sales increased 0.6% (a 4.9% increase in constant currency) driven by growth in PlayStation 4 and Xbox One pre-owned sales. Excluding the impact of foreign currency changes, this is the seventh consecutive quarter of positive pre-owned growth.
Technology Brands revenues increased 64.2%, driving a 31.1% sales increase (a 31.7% increase in constant currency) in the Mobile and Consumer Electronics category. Overall, this category contributed 14.0% of the company’s third quarter gross profit dollars, with an 81.2% increase in gross profit dollars. During the quarter, 105 new Technology Brands stores were opened and/or acquired.
Sales in the Other category grew 60.8% (a 69.8% increase in constant currency), driven by a nearly 400% sales increase of collectibles merchandise. Sales of collectibles merchandise, including ThinkGeek, are on track to reach the company’s goal of $300 million in fiscal 2015. Collectibles also drove 150 basis points of margin expansion in the Other category.
Non-GAAP digital receipts increased 8.7% (a 13.8% increase in constant currency) to $228.6 million, driven by sales of Destiny: The Taken King. GAAP digital sales totaled $40.0 million in the quarter. Based on year-to-date results, the digital category is on track to surpass $1 billion in receipts in fiscal 2015.
In the third quarter, as a result of non-recurring acquisition-related costs, the company recorded one-time charges of $1.6 million, $1.1 million net of tax benefits, or $0.01 per share. A reconciliation of non-GAAP adjusted net income to GAAP net income is included with this release (Schedule III).
Excluding the one-time charges, GameStop’s adjusted net earnings for the third quarter were $57.0 million, or adjusted diluted earnings per share of $0.54, compared to adjusted net earnings of $64.3 million, or adjusted diluted earnings per share of $0.57, in the prior year quarter.
Including the one-time charges, GameStop’s third quarter net earnings were $55.9 million, or diluted earnings per share of $0.53, compared to net earnings of $56.4 million, or diluted earnings per share of $0.50, in the prior year quarter. ■