Financial Results Briefing for the Three-Month Period Ended June 2011: Supplementary Information

The financial results for the three-month period ending June 2011 reflect a challenging fiscal start for Nintendo, characterized by a significant contraction in net sales and a shift into operating losses. Net sales for the quarter totaled 93.9 billion yen, a sharp decline compared to the 188.6 billion yen recorded during the same period in the previous year. This downturn resulted in an operating loss of 37.7 billion yen and a net loss of 25.5 billion yen, marking a difficult transition period for the company’s hardware and software segments.

The decline in performance is largely attributed to reduced sales volume across major platforms, including the Nintendo DS and Wii. While specific titles such as Pokémon Black Version/White Version, The Legend of Zelda: Ocarina of Time 3D, and Mario Kart Wii maintained million-seller status, the overall volume of software sales did not offset the broader market headwinds. The gross profit margin narrowed significantly to 11.7 percent, down from 37.3 percent in the prior year’s corresponding quarter, reflecting the impact of pricing pressures and shifting consumer demand.

Beyond operational results, the company faced volatility related to foreign exchange fluctuations. With a significant portion of net sales generated in U.S. dollars and Euros, the strengthening of the yen against these currencies negatively impacted consolidated earnings. Despite these fiscal pressures, the company maintained a robust pipeline of upcoming software releases for the Nintendo 3DS and Wii platforms, supported by a diverse lineup of third-party titles scheduled for release across Japan, the United States, and Europe throughout the remainder of the fiscal year. The data underscores a period of strategic realignment as the company navigated currency risks and sought to revitalize its software portfolio.