GameStop has announced its financial results for the fiscal year ending January 28, which reveal the US retailer has enough cash in the bank to buy ailing UK chain Game Group almost 50 times over.
The company is sitting on cash and cash equivalents of $655 million (£413.5m); Game Group's market capitalisation – the amount it would cost to buy the company based on its share price – is just £8.29 million.
Net income fell 16.7 per cent year on year, to $339.9 million (£214.6m) despite a slight increase in sales, from the previous year's $9.47 billion to $9.55 billion. Of greater interest, especially in the context of Game Group's current woes, is a breakdown of how GameStop's revenue and profit is split between new and second-hand sales.
During the course of the year the company made $1.6 billion from sales of new hardware, and $113.6 million in gross profit; $4.04 billion from new game sales, of which $839 million was profit; and $2.6 billion from second-hand sales, of which $1.2 billion was profit.
All of which goes some way to explaining why retailers lean so heavily on the pre-owned model. Gamestop's gross profit margin on new hardware is a shade over seven per cent; on new software it's 20.7 per cent. For pre-owned products, 46.6 per cent of sales revenue is pure profit.