Financial Analysis – Trend Analysis
Essay Preview: Financial Analysis – Trend Analysis
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People 8
Financial Analysis – Trend Analysis (GameStop & Best Buy): 8,9
Financial Analysis – Ratio Analysis (GameStop & Best Buy): 9,10,11,12
Summary: Strategy Recommendations 12,13
Appendices 14,15,16,17,18,19
References 20,21
Executive Summary
In 2010, GameStop has shown a growth even with the gaming industry not fully recovered from the economy. GameStop has even gained market share over its competitors. There were positive signs in the HD console category and in the consumer adoption of their digital products offerings. GameStop really wanted to focus in on their multichannel strategy in 2010 and that showed to pay dividends for them. Financially, GameStops steady operating cash flows allowed them to purchase $381 million of GameStop stock. They also have minimal debt after reducing their debt by 44% or close to $200 million in debt. (GameStop Annual Report, 2010, p.7)
2011 should allow for shareholders to smile once more because it is estimated that 100 new stores will be opening and operating by the end of the fiscal year. This will create more jobs for the economy and will drive revenue up. The launch of the “PowerUp Rewards” program has shown great success and only continues to get better. After gaining market share on competitors last year, GameStop is preparing to capture more by utilizing their advertising costs to promote the GameStop brand name.
Looking at the financial trends and ratio analysis excel charts, there may be some insight as to how GameStop can do a better job at capturing even more market share than they might have anticipated. At the end of this document there will be a summary of this entire report as well as strategy recommendations that may help GameStop in the future.
Background Information
History of GameStop
GameStop was once a small software company in Dallas, Texas named Babbages. Then from a series of mergers Babbages became GameStop. The first merger in GameStops history was Software Etc., and later in 1999 Babbages Etc. was sold to Barnes & Nobles. By 2000 Babbages Etc. became a subsidiary of Funco, a company acquired by Barnes & Noble in that very same year. At the end of