Customer experience is seen as a key differentiator today among loyalty marketers. For GameStop, that is certainly the case, as CEO Paul Raines attested to during the company’s fourth quarter earnings call on March 24.

“Our per-store productivity and customer experience metrics continue to be industry leading at both AT&T and Apple, and we expect to double the amount of operating income this year,” Raines explained, according to Seeking Alpha. “Looking at our business, here are key points to remember about GameStop. The first is that we will continue to innovate and expand our share in our video game business. While we anticipate physical game hardware and software will decline in 2016, this is a large cash generative business. Second point is that our non-GAAP Digital business is over $1 billion, and growing at rates on par with the top four game publishers. The next point is our technology brands unit is expected to be a billion-dollar business by the end of 2016 with major technology partners AT&T and Apple. And we expect to double its operating earnings before our anticipated transaction.”

What’s more, Raines said the Collectibles or Loot business is adjacent to GameStop’s core gaming business and is highly accretive to its gross margin.

“We sell Loot in our GameStop branded stores, online via thinkgeek.com, through wholesale channel, and in our new standalone collectible stores,” he explained. “In 2016, we expect the physical gaming category to decline, but to be offset by growth in our non-physical gaming businesses within our GameStop branded stores. That is how we expect to grow earnings for the full year. On the new businesses inside the GameStop branded stores, Digital receipts growth was strong at 16.3% in constant currency, led by DLC, mobile publishing, and Steam Xbox and PlayStation network currency.”

Raines noted that its Digital business is growing as fast as the average of GameStop’s top four publishers.
“Collectibles or Loot was also very strong with sales of more than $300 million, adding a significant category to our GameStop branded stores, as well as our online properties of Gamestop.com and Thinkgeek.com,” he said. “We are pleased that we have managed the transition of ramping up Digital and Collectibles inside our GameStop branded stores, while allowing for declines in physical software. In 2015, nearly 25% of operating earnings came from non-physical gaming sources like Digital, Collectibles, and Technology brands.”

Raines said the company’s goal is to increase the contribution from Digital, Collectibles, and Technology brands to 50% by the end of 2019.

“Outside our GameStop branded stores, we also have a pretty good story,” he said. “Tech Brands profits increased to 80% in the fourth quarter, excluding charges, and we now operate over 1,000 stores. The Tech Brand story has been one of rapid growth with very strong partnerships with AT&T and Apple. We are selling new services like DirecTV and Digital Life, as well as the new MacBook and Apple Watch and are optimistic around future product launches.”

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