Video game retailer GameStop said in its third quarter 2011 sales and earnings report today that digital sales have grown by 59 percent.
The company launched digital distribution, iDevice and gaming tablet businesses earlier this year and says they are significantly contributing to its gross margin expansion. Console digital sales rose 63 percent, while PC digital sales grew 51 percent. Investment in digital and emerging businesses is part of a long-term strategic plan the company has developed over the last three years and GameStop chief executive Paul Raines said during today’s earnings call it will supplement GameStop’s retail business this holiday season.
GameStop reports total sales for Q3 2011 were $1.95 billion, up 2.5 percent compared to $1.90 billion in the third quarter of 2010. However, lower than expected sales of new software, which Raines attributes to cash-strapped consumers, led to a 0.6 percent decrease in total company comparable store sales. The company expects comparable store sales to range from flat to 2.0 percent in the fourth quarter of fiscal 2011. Net earnings were also down for the third quarter, $53.9 million compared to $54.7 million during the same time period last year.
On a positive note, Raines says he is expecting a good start to the holiday season thanks to strong sell-through of new title releases in November like Call of Duty: Modern Warfare 3, which recently broke sales records by earning $775 million in five days for publisher Activision Blizzard.