The #1 games retailer in the US just released numbers for its fourth quarter, historically the best and most lucrative period for any retail chain. But for GameStop, it wasn’t all good news, as the company reported a decline from the previous year, leading to total 2011 profits of nearly 80% of what they were in 2010. It isn’t a good sign for the company that used to show consistent and reliable growth.
For the fiscal quarter, GameStop reported a profit of $174.7 million. The previous year, that number was $237.8 million. The company also released complete fiscal year figures, reporting $339.9 million in profit for all of FY2011, compared to $408 million in FY2010. In terms of actual annual revenue, though, that number was slightly up. GameStop raked in a total of $9.55 billion, compared to $9.47 billion the year before. So either the products it’s selling are lower-margin items than the previous year, or GameStop had a lot of administrative costs.
GameStop has to deal with the explosion of digital distribution. After all, why drive to the store when you can just hop online and download what you want? Company CEO Paul Raines had this to say: “In 2011, GameStop outperformed the video game market through disciplined execution of its core business and strategic initiatives. For 2012, we project operating earnings growth based on the continuation of our transformation, led by our strong pre-owned business, expanding digital offerings and emerging mobile categories.”