Pokemon and Nintendo Switch Boost GameStop's Sales

GameStop announced it had exceeded its first quarter earnings yesterday afternoon, thanks to the Nintendo Switch and Pokemon collectibles. The company reported over $2 billion in sales during the first three months of the year, marking the first time in over a year that the company had reported an increase in sales.

The biggest reason for GameStop's unexpected success was the Nintendo Switch. The new console helped drive GameStop's booming hardware sales, which made up for a relatively weak few months of software sales. While more gamers are turning to downloads and subscription services to buy their games, they still need to get their consoles from somewhere.

As GameStop's gaming business slowed, the company turned to collectibles to help offset some of the difference. With many stores now dedicating almost half of their floor space to collectibles, GameStop also reported a big boost in sales in that department thanks largely to Pokemon collectibles. Many GameStops now have dedicated space to Pokemon Trading Cards and are hosting Pokemon card events this weekend.

While analysts had projected that the company's sales at brick and mortar stores would drop by 2.6%, GameStop's retail sales actually rose by over 2%, which is a big surprise given the overall decline in retail in the United States and abroad.

GameStop expects both the Nintendo Switch and collectibles to be a major driver of business for the rest of the year. In particular, GameStop expects its collectibles business to grow by nearly 40% compared to 2016.

While GameStop's sales report gave investors some optimism, the company's stock still took a tumble during afterhours trading last night, likely due to GameStop reporting smaller earnings (the amount of money a company makes AFTER subtracting expenses) than last year.