QUOTE AND NEWS
SeekingAlpha  Oct 7  Comment 
By Marshall Hargrave: Conn's (NASDAQ:CONN) is no doubt feeling the competitive pressures, with cutthroat competition driving margins down for all the major electronics retailers. However, CONN appears to have a much larger issue -- a large amount...
Market Intelligence Center  Oct 7  Comment 
For a hedged play on GameStop Corp. (GME) MarketIntelligenceCenter.com’s algorithms selected the Jan. '15 $40.00 covered call for a net debit in the $36.46 area. That is also the break-even stock price for the covered call. This trade will...
Motley Fool  Oct 1  Comment 
A few important points to know about this retailer's growing dividend.
Market Intelligence Center  Sep 26  Comment 
The patented options-trade picking algorithms used by MarketIntelligenceCenter.com found a trading opportunity with GameStop Corp. (GME) that should provide a 10.03% return in just 113 days. Sell one Jan. '15 call at the $43.00 level for each 100...
Benzinga  Sep 25  Comment 
GameStop Corp. (NYSE: GME) said Thursday it will nearly double its seasonal hiring in a reflection of the current strength of its business. The Grapevine, Texas-based video game retailer said it will hire 25,000 temporary employees nationwide...
Forbes  Sep 24  Comment 
The used video game retailer is expanding into toys and possibly used digital sales as well.
Motley Fool  Sep 23  Comment 
What income investors should know about this retailer's dividend.
SeekingAlpha  Sep 23  Comment 
By Efficient Alpha: GameStop (NYSE: GME) is the world's largest retailer of video game and PC entertainment software with $9.5 billion in revenue over the last year. Despite weakness in its industry, the company has carved out a niche and...
DailyFinance  Sep 19  Comment 
GameStop Corp. (NYSE: GME), a family of specialty retail brands that makes the most popular technologies affordable and simple, today announced the pricing of its offering of $350 million in aggregate principal amount of its...
Market Intelligence Center  Sep 19  Comment 
GameStop Corp. (GME) traded between $43.52 and $44.39 before closing at $44.23 Thursday and presents some attractive trading opportunities today according to MarketIntelligenceCenter.com's patented algorithms. The computer program that picks...




 
TOP CONTRIBUTORS

GameStop (NYSE:GME) is the world's largest retailer of video game hardware and software. The company has saturated U.S. mall locations, and is now expanding into strip centers and international locations to drive store growth. In addition to its size, Game Stop differentiates itself from its competitors by carrying one of the largest assortments of used video games. The used business is important to GameStop, as used games are more profitable, with 46.8% margins vs. 21.3% for new games.[1] The company earned $9 billion in net sales and $376 million in net income in 2009.[2]

Like other video game retailers, the company is also dependent on new console releases to drive software and accessory sales. The three main video game consoles in the market are Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii), which are nearing the end of their cycles. Retailers, like GameStop, will be much more successful in the middle of cycles and will generally fare worse in between cycles.

Company Overview

Gamestop operates 6,450 stores in the United States, Australia, Canada and Europe, primarily under the names GameStop and EB Games. The company also operates electronic commerce Web sites, including www.gamestop.com, and publishes Game Informer, the industry’s largest multi-platform video game magazine in the United States based on circulation, with approximately 4.0 million subscribers.[3]

Products[1]

  • New Video Game Hardware - 19.3% of net sales, 6.5% of gross profit
  • New Video Game Software - 41.1% of net sales, 21.3% of gross profit
  • Used Video Game Products - 13.2% of net sales, 46.8% of gross profit
  • Other - 13.2% of net sales, 33.8% of gross profit (other products include PC entertainment and other software, accessories, and magazines)


Key Trends and Forces

Increasing Popularity of Video Games

The Entertainment Software Association (“ESA”) estimates that 65% of all American households play video or computer games.[4] With the evolution of technology providing a more realistic playing environment and the creation of family friendly game consoles like the Nintendo Wii, video games are more popular than ever. Additionally, video games can also be more than just about the games -- the Wii Fit Plus combines fitness with gaming and is geared to people of all ages. The increasing popularity of these kinds of games means a higher demand for video games, and a better bottom line for Gamestop.

The Video Game Industry is Very Cyclical

Video game producers and retailers are extremely dependent on new video game hardware to drive business. The main video game consoles are Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii), all of which are nearing the end of their. Hardware sales are usually greatest in the third year of a cycle, and software sales are greatest in the fifth year. Gamestop will look to capitalize on rising software sales rather than hardware sales as these systems mature.

Expanding Target Market

In the late 1970's when video games were first created, the average age of a gamer was ten years old. The average age of a gamer today is 13 years old, according to the Entertainment Software Association. In addition, 25 percent of Americans over the age of 50 play video games on a regular basis. More and more people are spending money on video game hardware and software, which benefits the entire industry. Also, young children are spending more time playing video games, and less time with traditional toys and games. More video game players means more people buying Gamestop's products.[4] dss

Female Video Game Use

Video games have traditionally been a male-dominated market, but the number of female gamers has grown significantly. In 2009 40% of video game users were female. However, most of these female gamers are casual gamers who play card, word, and puzzle games online. These typically older women are not buying video game hardware and software.[4]

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