GME
#That's a great question.
First question, hardware strength and how long ---+ it's an interesting question, right, because we obviously accelerated and brought forward a bunch of demand.
The question he's got is how long will this last.
I would say number one, we're still pretty early in the cycle.
The last one isn't gone in, what, seven years in most cases, and we're barely two years into it.
I think we're seeing an acceleration on the software side in terms of the installed base is growing.
You've seen more and more new IP coming out.
And then on the PowerUp side, one of the things we continue to track is PowerUp members' interest in purchasing new hardware.
And those numbers are still very strong and similar to what we've reported in the past.
So all of our indicators are positive that consumers are still very excited about these products.
And there's a ton of consumers out there who still want these new consoles who haven't bought them or haven't been able to afford them yet.
I haven't checked ---+ the goal, <UNK>, of the value, if you remember, the value introduction, I think it was in the March call last year, the goal of the value product was to increase our market share in titles below $20.
That's our traditional weakness on the new software side.
I think we did that in the first quarter.
Second quarter, I'm ashamed to say I haven't checked.
But I suspect we probably increased that.
It has not been as fast as we had hoped, and that's partly because we're just struggling to get to some of those publishers.
On the other hand, there's a lot of activity in that space by us intent on purchasing more value products.
I think you'll see more on that.
Thank you, <UNK>.
Guys, what can we disclose on that.
We have to be careful here.
In terms of the revenue performance on a per store basis, <UNK>, it is not included in our comp number.
And the reason for that is because historically, the wireless retail business is subject to a lot of volatility that's driven by changes in the commission and compensation structures that the carriers put in.
We did a little bit of research, as we've said before, in terms of what companies were public in this space.
I think there aren't any left.
They've been acquired.
And the practice is to not disclose those comps, rather to talk in terms of, for us, the growth in profitability and growth in the store base, I think, is a significant thing.
Not sure we disclosed the operating earnings number for the quarter, and I don't have that immediately in front of me.
So we'll have to get back to you on that one.
I think the thing you've got to understand is we've got partners there who have rules about what they want to disclose.
The mobile segment, though, I think it's a good proxy for ---+ of course, we don't have operating earnings (Inaudible).
That will be in our 10-Q, <UNK>.
I apologize for not having that.
Well, as <UNK> and I both mentioned in slightly different ways in our scripts, we expect the third quarter profit to be comparable to last year's operating earnings for Tech Brands.
We will continue, as we're opening 90 to 100 stores this quarter, to incur some of those infrastructure costs to prepare for those openings.
But in the fourth quarter, we think we're going to be largely past that and we expect that the profit will grow significantly from last year.
I think <UNK> said ex- those infrastructure investments, we would expect the Tech Brands profit for the year to be 40% to 50% up from last year.
Yes, that is ---+ I don't have that slide in front of me, but if I remember correctly, it was approximately $170 million in operating earnings against a revenue base of about $1.5 billion.
So in excess of 10% operating margin in that space.
Which would be accretive to us.
Obviously, yes.
On traditional operating margins.
Sure.
There's a slide on this one, by the way, <UNK>.
Did you take it down.
Sure it is.
I think <UNK> had in his script, our inventory level in trades has gone up.
The issue is, the debate here around here, if you were in our offices every day, the constant debate is trade values versus new launches that drive trades versus marketing, kind of the big three.
And what we've found ---+ and we can get proven wrong ---+ what we've found is big launches and in-store execution drives trades more than trade value.
<UNK>.
I would just add to that, from a consumer standpoint, it's value and awareness.
We made a huge step last year with our simplified trade pricing.
What we found is that consumers responded extremely well to that.
And with a lesser mix of promotion and a greater mix of everyday value, people really responded well to that.
And then the other thing we find is that trade awareness is still always an opportunity.
And every time we have an opportunity, we want to communicate that, and every time we communicate that, we bring new people in.
And all the evidence we have suggests that when we make people aware of the trade values and what they can get, they respond very positively to it.
So we'll continue to work on awareness.
Yes.
Hello, <UNK>.
This is <UNK> <UNK>.
I think that what we'll see, because it's a broader range of IP, we will see it to be smoother.
So you're consistently having new movies, new television shows and video game launches throughout the year.
And so for example, the movie launches in the summer, there's frequently not a lot of new releases on video games, but there's a lot of loot you can sell with that new IP.
So it seems like it will be more consistently strong.
I think the fact that you're seeing us outperform in the second quarter indicates how the loot is really contributing to balancing our demand flow.
And as <UNK> says, there's a lot of IP that's not video games.
So it should.
Absolutely.
We hope so.
I'm looking at <UNK>.
He's shaking his head.
(Laughter)
I'm nodding.
He doesn't have a big checkbook, but he's nodding.
Want to take that, <UNK>.
Sure, just a second.
I'll go ahead and give the comps.
The Canadian comp was 8.5% and we were down in comp in Europe 3.8%.
As far as color, I'll turn it over to <UNK>.
The color would be our two strongest markets have been Australia and Canada.
In Europe last year, we had very good hardware allocations and Europe really exceeded the rest of the international markets in terms of hardware sales.
This year we're back to our normal ---+ closer to our normal market size in hardware, and so that was a little bit of headwind for them.
One thing to add, <UNK>, maybe might be that the concept of loot appears to be more of an Anglo, maybe Northern European concept.
Southern Europe, we haven't seen the kind of results we've seen maybe in some of the Northern European markets.
That's true.
The growth of loot in Australia, Canada, the United States, Northern Europe, the Nordics and Ireland have been consistently ahead of what we've seen in Southern Europe.
So that's something we continue to have to explore.
We may not have the right assortment yet.
That's one possibility.
But we certainly have work to do.
For video games or loot or ---+ .
I'll let these guys add their comments.
We've been watching all of these players around the world for a long time, and I can't say I've seen much diminishing of anything they're doing.
They're all running their play.
Best Buy did have a good number yesterday, it appears.
I haven't seen the video game comp.
<UNK>.
I'd be surprised if they really gained a ton of share.
But we don't see a huge amount of activity.
Our competitor base is so broad now, too.
Used to be we'd get on a call and we'd talk about Walmart and Best Buy, Media Mart and [Satur] and JB Hi-Fi, Amazon.
Today we talk about lots and lots of other people, digital players, publishers who are trying to go direct versus through retail.
And so I have not seen a ton of activity here that's new, other than the players.
I don't see a lot of change in activity.
I think that there is a ---+ we continue to gain market share.
And so like we say quarter in and quarter out, we're selling over 50% of the games.
We have made a very distinct effort to try and win this console launch.
We've been very clear about that for the last two years, and I think we've been effective in that.
So I'm sure that there are people at some of those other locations that <UNK> mentioned that are seeing a significant reduction.
The whole category is not ---+ has not tripled the sale of PS3s, and the whole category has not nearly doubled Xbox One.
So clearly, we've taken a lot of share from a lot of those other people.
I don't think that they're trying less.
I just think we're running our play and it seems to be working.
Guys, we should talk about, on the mobile loot side, there's a whole new cast of characters.
We are a committed AT&T partner, so we are in partnership with them.
We compete directly with Verizon, Sprint and T-Mobile.
And we sort of live and die by those fortunes.
On the loot side, there's probably a lot of players on the loot side.
Don't have share data on loot, unfortunately.
But I suspect we're growing very, very fast on the share data on loot.
Yes, yes, I think that's accurate.
I think that's accurate.
And there's just a lot going on under one roof.
Don't forget, we also offer Cricket in 2,000 stores or so.
So 2,000 GameStop stores, we will sell you a Cricket prepaid phone and a contract.
So when you can do prepaid phones in a store, you can probably do some other prepaid things.
So we're exploring that very aggressively.
There's just a lot ---+ as I said in my notes, there's just a lot going on here, and we don't have the luxury of slowing down.
Maybe today it feels less scary, but there was a time here where we were coming in every day, figuring out how we're going to get through the day and so forth.
Today, fortunately, I think we're past that.
But we can't slow down, so ---+
All right.
Well, thank you for your support of GameStop and we'll look forward to talking to everyone.
If you're coming to our show next week, we'll see you there; and if not, we'll talk to you during the quarter.
Thank you.
