One of the few bright spots for retailer GameStop (GME) these days is its collectible merchandise. Used games are falling by the wayside as the industry has mostly switched to digital delivery, though exceptions are still out there. And GameStop is still working the collectible angles as thoroughly as it can with a new promotion for Resident Evil Requiem. This move was clearly playing to its strengths, and GameStop shares gained over 2% in Wednesday morning’s trading.
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While most are absolutely on board with picking up a copy of Resident Evil Requiem because it’s Resident Evil Requiem, GameStop is going to do what it can to sweeten the pot. Those who pre-order the game will get an exclusive tote bag, which features an image that looks like the ruins of Raccoon City.
Many are underwhelmed by this bonus, but are looking on the bright side, saying that a free bag is a free bag. That said, if nothing else, it makes an interesting wall-hanger. Which is true. Free merchandise is free merchandise, and GameStop has managed to keep itself alive on the strength of collectibles even as the market for its primary revenue stream—used games—slowly collapses.
The Third-Quarter Earnings Drive The Point Home
Collectibles have been good to GameStop, reports note, as third-quarter revenue figures demonstrate. Revenue was down 4.6% to $821 million, with hardware, software, and accessories all in decline. This is not the best news for GameStop, though some of it can be explained. Hardware revenue should be down across the board, as we have not had a new major console release in around five years at this point. Software sales are down thanks to digital delivery, and accessories have always been just that, things that are nice to have but not strictly necessary.
Collectibles, however, were the company’s bright spot. Collectible sales were up 50%, a segment that hit $256.1 million by itself. That makes roughly a third of the entire company’s revenue, and also likely demonstrates why Resident Evil Requiem is getting its own tote bag.
Is GameStop a Buy, Sell or Hold?
Turning to Wall Street, no analysts currently hold a position on GME stock. After a 29.33% loss in its share price over the past year, a look at the last five days of trading in GME stock shows substantial volatility. Interestingly, shares have nearly recovered from the decline seen a week ago on the 10th. It should take less than a full dollar per share to recover to the level shares were at on the 9th.
