Despite strong Switch demand, weak game sales drag GameStop's profits down

GameStop's latest earnings report show profits fell as sales of both new and pre-owned games slipped, 'impacted by lagging Xbox One sales.'

Today's the day GameStop announced earnings for the second quarter of its 2017 fiscal year, and while revenues climbed slightly it looks like profits fell as sales of both new and pre-owned games slipped.

In terms of numbers, the company reported profits of $22.2 million on sales of $1.68 billion during the quarter, which ended July 29th. That's about $5 million less than the $27.9 million in profits on $1.63 billion in revenue it saw during the same period last year.

So what changed? GameStop says that while sales of new video game hardware rose about 14.8 percent (in large part due to continuing demand for Nintendo's Switch console) sales of both new and used game software were "impacted by lagging Xbox One sales" and fell 3.4 and 7.5 percent, respectively.  

Outside of games, the company's fortunes appear to be doing well; both its "Technology" and "Collectibles" divisions each saw a year-over-year rise in both sales and profits, thanks in part to strong sales of licensed Pokemon and Marvel items at retail.

Looking ahead, company chief Paul Raines stated GameStop is hopeful about seeing its fortunes rise on the back of ongoing demand for the Switch, the Xbox One X, new games, and new iPhones.

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