GameStop posts first sales increase in five quarters

Reuters

Reuters

GameStop beat Wall Street's estimates for both revenue and earnings, after reporting strong hardware sales, mainly due to the Switch.

"Our focus will continue to be executing our diversification strategy, exercising cost discipline, and increasing our share in the video game market", the company said in a release.

Nintendo Switch has had a phenomenal response in its launch year, and the console is usually sold out within weeks of being restocked.

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Nintendo Switch has come as a blessing for several retailers.

Net sales rose 3.8 percent to $2.05 billion in the first quarter ended April 29, the company said on Thursday. Collectible sales were up 39.1% to $114.5 million (attributed to "strong global sales" of Pokemon products), while Technology Brand sales were up 21.5% to $201.4 million.

However, the company posted a surprise 2.3 percent rise in sales at established stores, compared with analysts' average expectation of a decline of 3.6 percent, according to research firm Consensus Metrix.

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The CFO also suggested that sales of the Nintendo Switch could have been higher if it wasn't so hard to acquire the necessary units to meet the demand. The retailer managed to make up for it with a jump of 17.1 percent in worldwide sales, according to Shack News. He also said that "there is a contest among all the retailers, online and in store, with our good friends at Nintendo".

Shares of GameStop are down 6% in after-hours trading. GameStop said that decline is due to "tough overlap" with games released during the same period a year ago, which included releases such as Dark Souls III, The Division, and Street Fighter V.

Gamestop has been on record praising the Switch before, saying that stores constantly sell through their stock faster than they can supply them.

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Although GameStop benefited from sales of the highly sought after Switch console in the first quarter, its forecast reflected the lack of insight into shipments of the consoles for the rest of the year, the company said.

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