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Amid falling earnings, GameStop chief says Switch has 'potential to be Wii-like'

GameStop today reported its earnings for the final quarter and the full 12 months of its 2016 fiscal year, and sales and profits are down across the board for the retail giant.

Alex Wawro, Contributor

March 23, 2017

2 Min Read

GameStop today reported its earnings for the final quarter and the full 12 months of its 2016 fiscal year, which closed January 28th, and sales and profits are down across the board for the retail giant.

In the three months ending January 28th, GameStop reports total global sales dropped 13.6 percent year-over-year to $3.05 billion, while profits fell to $208.7 million from $247.8 million in the same quarter a year prior. The company chalked a lot of the blame on its "disappointing" holiday period late last year

"The fourth quarter was significantly impacted by weak sales of certain AAA titles and aggressive console promotions by other retailers on Thanksgiving Day and Black Friday," reads an excerpt of today's earnings report. As a result, it claims, sales of new game hardware declined 29.1 percent and new game software declined by 19.3 percent during the quarter. Sales of pre-owned games also fell, but not as much -- they were down 6.7 percent year-over-year.

The company went on to note that the decline in new game sales wasn't limited to physical copies: digital game sales were also impacted by the lack of triple-A game copies being sold, falling 5.8 percent to 57.2 million during the quarter.

In a conference call with investors, GameStop CEO Paul Raines acknowledged that mid-cycle console revamps (like the PS4 Pro and the Xbox One S) were "not as meaningful as we had hoped" for the company's hardware sales business, but expressed hope that Nintendo's new Switch and Microsoft's upcoming Xbox One revamp, "Project Scorpio," would be a boon to the company.

"Purchase intent for Switch and Scorpio is at PS4 levels or higher, " Raines said during the call "Just a note on the Switch launch: We have had a very successful launch so far, with high attach rates of software, particularly Zelda and related addons. The Switch has provided a dramatic lift in traffic in-store, and has real potential to be Wii-like in its potential to expand the gaming category from core to broad audiences."

That quarter caps off a fiscal year that also saw a decrease in sales and profits. In the twelve months ending January 28th, GameStop saw total global sales drop 8.1 percent to $8.61 billion. Profits also fell, to $353.2 million from the $402.8 million the company brought in during the prior year.

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