GameStop sales drop as it waits on next-gen consoles

Digital distribution is taking hold on a broader scale, but GameStop's brick-and-mortar retail business is showing resilience. The company on Thursday reported a slide in sales and profits, but still managed to beat its previous forecasts for the quarter ended August 3. Total sales for the quarter were $1.38 billion, down 11 percent year-on-year from $1.55 billion. Profits were $10.5 million, down from $21 million. Microsoft's Xbox One and PlayStation 4 are due to release this fall. GameStop fully expects the new hardware to spur sales in the months ahead, along with a strong lineup of games. "Through two quarters, the year has played out as expected," said CEO Paul Raines. “During this console transition period, our financial results have been supported by the continued growth of our emerging businesses." Mobile hardware sales, a newer source of revenue for GameStop, reached $55.1 million, up 121 percent year-on-year. Digital sales were up 18 percent to $158 million. GameStop's traditional revenue sources -- new games, used games and pre-owned sales (hardware and software) -- were all down for the quarter. Despite those declines, the company raised profit projections for the year, "Based on the strong second quarter results as well as positive trends in new console pre-orders and higher-than-expected launch quantity allocation," according to GameStop's earnings release. Investors seemed happy too: Shares were up 9 percent to $47.92 in pre-market trading this morning.