GameStop is further expanding its brand portfolio beyond video games and consumer electronics by acquiring three national AT&T-authorized wireless retailers: Cellular World, Midwest Cellular and Red Skye Wireless. The acquisition will add 507 stores to GameStop’s Technology Brands business.
Although financial terms of the deal have not officially been disclosed, the purchase price amounted to the bulk of the $475 million the company raised in a debt offering earlier this year, according to Tony Bartel, GameStop’s Chief Operating Officer, in an interview with Bloomberg.
The deal establishes GameStop as a bigger player within wireless retailing: the brand now serves as AT&T’s largest authorized retailer with 1,421 AT&T Mobility stores. GameStop also is the largest retail distributor of AT&T’s subsidiary Cricket Wireless, with Cricket products and services available in 3,400 of its U.S. retail locations.
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While mobile and consumer electronics sales contributed 9.8% of GameStop’s revenue in Q1, it is evident the retailer envisions massive growth in this category. The company’s wireless retailing is on pace to produce $1 billion in annualized sales this year and produce a profit ranging from $85 million to $100 million.
With the overall video game industry experiencing a 15% slump in physical retail sales in 2015 and the console games business remaining flat since 2012, GameStop sees its Technology Brands business as a major breadwinner going ahead. The retailer projects revenue from its Technology Brands to hit $1.6 billion in 2019.
“Today’s announcement showcases the strength of our relationship with AT&T and fortifies our diversification efforts,” said Paul Raines, CEO of GameStop. “With the continued investments in our Technology Brands business, we are on track to achieve our goal of generating $200 million of operating earnings in this growing segment by the end of 2019,” Raines added.
GameStop initially dipped its feet into mobile in 2013 when it acquired Spring Mobile, an AT&T authorized retailer operating approximately 150 stores. Spring Mobile won a bid in 2015 to take over 163 RadioShack stores.
