GameStop and Pier 1: A Tale of Two Retailers

Admittedly, leading video game retailer GameStop (NYSE:GME) and once-struggling furniture and "dustables" retailer Pier 1 (NYSE:PIR) would seem to have little in common. After all, apart from men who are transitioning from bachelorhood to married life, you would not think they share many customers. While that all may be true, I mention them together for a different reason - namely, the businesses are heading in opposite directions and have very different futures.

GameStop - Here Today, Where Tomorrow?GameStop has certainly enjoyed a fine trajectory. On the way towards becoming the leading independent seller of games (with upwards of 20% market share), the company has boasted a 10-year revenue growth rate in excess of 30% and produces very solid returns on capital. Moreover, the company has a nifty little sub-business within its operations trading used games; while used games represent about one-quarter of the company's sales, they produce about half of the gross profit.


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