GameStop posts $624.3 million loss due to impairment charges

Specialty retailer records massive loss on impairment test mandated by ASC 350; digital sales rise 31 percent to $127 million; total revenue down 8.9 percent to $1.77 billion.

GameStop posted a net loss of $624.3 million for its third quarter ended October 27 due to goodwill and other impairment charges of $678.9 million. According to the retailer, this was required under Accounting Standards Codification 350 due to a temporary decline in the retailer's stock value during the company's second quarter.

GameStop said these charges "primarily" relate to the company's international reporting segments and are "non-cash" charges, meaning they will "not affect future operations, cash flows, or liquidity position."

Excluding the impairment charges, GameStop posted a third-quarter profit of $47.2 million, compared to a profit of $53.9 million last year.

In all, GameStop's revenue for the period came in at $1.77 billion, down 8.9 percent from the $1.95 billion the company hauled this time last year. Additionally, sales of new software, used games, and new hardware all dropped during the quarter due to the protracted console cycle and what GameStop called a "difficult comparison" of titles released during Q3 2012.

GameStop's sales sheet wasn't all bad. The company's "other" segment rose 31.1 percent during the quarter, driven primarily by its "new business" channels. Additionally, digital sales surged 31.8 percent to $127 million, while mobile sales (tablet and used mobile products) hit $43.2 million for the quarter, on pace to reach the company's $150-$200 million full-year forecast.

GameStop will hold a postearnings call today at 11 a.m. EDT. Check back later for updates from the call.

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Dogeatr00
Dogeatr00

Say what you will about Gamestop. I hated them for years. I used to be solely a Best Buy customer, but they want to sell you everything under the sun instead of just ringing you out. I got sick of it, even though I was a regular customer. Sure, Gamestop offered me preorders and all that crap the first couple of times I went in the store, but once they recognized my face, they checked me out happily, and occasionally I would preorder stuff. No upselling from my store. They are awesome.

 

Meh, big business always runs the way it thinks to make a profit. Unfortunately, they do not realize I make the decision of whether or not I want to shop at their store. No matter where you go, somebody will be upselling. Will the employees actually notice when I stop showing up? Who knows, but if they are smart, they will find the balance between what they have to do and what their customer wants. Whenever I have employees treat me with respect, I will return. Simple as that.

Thanatos2k
Thanatos2k

Gamestop is not a store to buy video games anymore.  It is a place to preorder video games or buy/trade used games.

 

Against my better judgement I went in on ship day to purchase a new copy of Virtue's Last Reward.  The store had received one copy and it was reserved for someone who preordered.

 

A new game that just came out and Gamestop shipped ZERO copies to the store to sell.  So I went home and I ordered it online from Amazon.

 

Gamestop doesn't sell new games anymore.  Don't be fooled.

tennisprobill69
tennisprobill69

people can bash Gamestop all they want, but i think Gametop played a huge role in making the gaming industry as popular and mainstream as it is today, that being said that may also be a bad thing. 

Unfallen_Satan
Unfallen_Satan

I applaud this article because it made me go look up "impairment test" and ask my B-school friend about it.

JDWolfie
JDWolfie

Still making profit at $1.77 Billion.

DrKill09
DrKill09

Crash and burn, Gamestop!

blackace
blackace

I get games that I want immediately from Gamestop. They usually have some nice pre-order bonuses as well. If you don't care about online passes and the extra bonuses, you're better of just waiting for the price to drop on the game or getting it on EBay for a lot less.

RiverCityRandom
RiverCityRandom

I see Gamestop as a "convenience store" for games. Sure, you could save more by going the online route... Or, if you don't want to wait, go there and pay more. I use both.

hahnasty
hahnasty

Props to GameSpot for mentioning the codification section. GameStop will continue to profit in the future, this was a one-time, non-cash hit... the revenue drop is more interesting personally.

IanNottinghamX
IanNottinghamX

F Gamestop...they need to exit the game industry..theres better stores out there that dont piss on their customers..

Toysoldier34
Toysoldier34

Gamestop needs to go under. Their used sales have hurt the industry a lot. They are the reason we see games requiring things like Online passes. Because the people that make the games don't see any money from games sold used. It hurts the industry as much as pirating games does.

rawsavon
rawsavon

...a distinct lack of accounting knowledge in these comments.

Though, to be fair, that is to be expected and is understandable. I mean who wants to learn that sh*t other than finance/accounting majors and investors (this coming from an accountant).

CountBleck12
CountBleck12

Something tells me that they're still going to be in business.... and no I don't like them either..

SolidTy
SolidTy

Good, Gamestop deserve it.

2012 wasn't a great gaming year, but it was decent.

dreamgod247
dreamgod247

Don't feel to bad about Gamestop, there going make that money up soon. From the sale of Black Ops2, Wii U and the upcoming Xbox 720, PS4.

Nexozable
Nexozable

Amazon, amazon, doe's everything a videogame store does.

 

Even sells furniture! Why is that? I dunno, look ouuuuut! Here comes the Amazon.

LindBergh2007
LindBergh2007

That should be in the billions. Wake me up when GameStop loses $1 billion.

fredwv
fredwv

gamestop will always have business because kiddies don't have credit cards and paypal.

Mazoch
Mazoch

Looks like the next Block Buster. A victim of changing times. Just like brick and mortar video stores went the way of the Dodo Bird, so will the brick and mortar video game stores.

zilcher
zilcher

 @JDWolfie no, that's revenue, not profit. The difference is the first is the money that was earned, the second is what was earned MINUS what it cost them to run the business, like rents, salaries, cost of inventory and other charges. Learn economics..

BorderCount
BorderCount

 @Toysoldier34 If online multiplayer had been this big 10 years ago during the heyday rental chains like Blockbuster, we would have seen online passes then and blamed them on Blockbuster. Also, the developers aren't the ones 'hurting' from used game sales, it's the publishers. Do you think BioWare would want to inflict that evil upon us? No, it was parent company EA.

zilcher
zilcher

 @Toysoldier34 I'm tired of this poor developers not making money from used games idea. If you drive and have a car and then buy a new one and sell the old one does the car maker get any money from the sale of your old car? Or you live in a house and sell it to buy another one, does the builder of the old house get any money from your sale of the old house?  It's the same thing, a commodity that's bought and resold. Deal with it.

MaximumPorkchop
MaximumPorkchop

 @Toysoldier34 It's called the free market economy dude; if you buy something, you should be able to sell it to someone else.  Ultimately, if you can't sell the product you bought (i.e. digital downloads), then you don't really own it, according to capitalism.

richten71
richten71

 @Toysoldier34 How have they hurt the industry? It's the publishers that charge for the online passes, not Gamestop. And again, the developers not seeing any money from used game sales is the fault of the publishers and the consumers, not Gamestop.

Slim02
Slim02

 @fredwv What that have to do with things? Because kiddies can get games cheaper at Target, Best Buy and Walmart with out having credit cards and paypal too... 

 

Slim02
Slim02

 @Mazoch The reason Video Stores closed because they would charge $2.99 to $3.99 for each movie and only have 3 to 5 days. Where Netflix you pay a $10 a month and can watch as many movies you want. What do you thing is a better choice? rent 5 blu-ray for $19.95 or rent 5 or more Blu-ray for $10.....

FedCom
FedCom

 @Mazoch Well Block Buster was replaced by a vending machine in a McDonalds. Now that some of the big box stores are reselling used games though this might be the case soon. Though when I think used games and "the best preorder bonus all the time ever" I don't usually think Best Buy. Not yet.

Nick_Fury_Shine
Nick_Fury_Shine

You don't need a degree in economics to know that, nor to explain it. You don't really have to be smug or rude about it. The person may not be as educated as you, based on location, society and other factors.

Toysoldier34
Toysoldier34

 @zilcher Those analogies don't apply in the same way because the markets are setup from the ground up to work that way. The pricing on games would change a lot to accommodate a market style like that.

Toysoldier34
Toysoldier34

 @MaximumPorkchop There is nothing wrong with used sales. Just Gamestop monopolized it to the point of it hurting the industry. It worked just fine in the past gens when it wasn't as big.

Toysoldier34
Toysoldier34

 @richten71 Online passes while shady looking to players is a way that they can get some money from used sales, because people buying the game new and when they get profit doesn't hurt them. 

 

Gamestop has hurt the industry with how big they have made used sales. Yes it is also a big part on consumers too. When they can't spend $5 extra dollars to support a game they like. There are so many ways that people play games now and get a hold of them like used sales that the people making the games don't see enough from them. Too many people just decide to wait for a game to go used to buy it so they can save $5.

 

If there were no used games and they just sold for $50 instead everyone would win. Consumers have to pay less and developers see money for every sale and despite the lower price still make money.

Bleak5170
Bleak5170

 @Nexozable 

 

   How so? I'm outside of the U.S. and I order from amazon.com all the time.

pubert4u
pubert4u

@jhcho2 @Nick_Fury_Shine

The point that he can post about what ever he wants. He made a simple statement and received a smug duchess sack rep once. It would be like me saying he lacks the understanding of perspective taking, because it is hard to see/hear others ideas with "ur crainium up/around Uranus". Again if I said it towards him.

jhcho2
jhcho2

 @Nick_Fury_Shine Well, if he's not educated enough to know the difference between profit and revenue, then he should refrain from posting anything about profit.

zilcher
zilcher

 @Toysoldier34 You make a valid point concerning servers being kept online but let's not forget it is in the games best interest that there is a large online community. How many games have been trashed because people complain no one is online. But server availability is also dependent on the company running it. Take EA for instance. They are known for dropping servers 2 years after a games release, especially for their sports franchises. I guess they figure if they let people play the old version no one would buy the new one.

 I also agree with you about supporting developers who make games you enjoy. We want to keep them in business so we can enjoy more of their work. And they do deserve to be rewarded. It's just that there are a lot of me too companies as I like to call them, that seem to be the most vocal about this issue we are speaking about. Some companies spend a lot of money producing their games while others don't even come close but still charge the industry norm for their games. Then their games don't sell and they blame the used game market.

Toysoldier34
Toysoldier34

 @zilcher A big part of it I feel is how frequently the games are sold used.Books do get sold used but not as much as games do. The same copy of a game can be sold five or more times easy. While this does happen with cars and homes they are sold over the span of many years and are sold very high to compensate for that. A few years back before Gamestop was as big as they now are used sales did happen and theyw ere around but no one complained because it wasn't an issue. Gamestop has made used sales such a common thing now that it creates an issue.

 

There are many people for instance that wait a few weeks after a game launches so they can buy it used for $5 less. Before it was so common they would have most likely just bought it new and not hassled with finding another person to buy it from if a shop wasn't selling games used.

 

Also with games now having so much content online games cost them money to maintain servers and keep service going. It is more than just print the games and sell them like it used to be. This ongoing cost is hard to keep up when a year after the launch of the game 70% of the copies people buy are used. The people that have finished playing the game sell it and now new people keep playing and putting load on servers but they aren't receiving much more funding to keep them up.

 

While overall it can be blown out of proportion and I don't like hearing about it, I understand why they may feel that way.  My biggest issue is just that people need to keep it in mind when they want to save a few bucks that could go into supporting the company that made the game you want so they can keep making games you want to play.

zilcher
zilcher

 @Toysoldier34 Another point I'd like to make is selling used games actually fuels new sales. The people that sell them usually use the money toward other games. In fact if you look at the Gamestop web page they will give you 30% more for you used game if you use the money toward the purchase of a new game because they know that's what people usually spend the money on.

zilcher
zilcher

 @Toysoldier34  ok what about Ebay. You can buy and sell cars there as well as video games. I guess you're not getting what I'm saying. And about pricing, books can sell for what a used video game sells for but you don't hear publishers or authors crying about reselling them. The point I'm making is a lot of things are bought new and can be sold later but it's only video game companies that cry about it.

Toysoldier34
Toysoldier34

 @zilcher Not the market for whether you can buy and sell them. The pricing and everything else that goes into it. You are clearly missing everything I am saying.

zilcher
zilcher

 @Toysoldier34 but the markets are set up that way. It's called Gamestop and Amazon and BestBuy, so yes the analogy does apply. And so does the law.

Toysoldier34
Toysoldier34

 @victorlamy  @richten71 If the second person buying the game spent $5 more and bought it new the company would get more money and keep the games going.  It is less of an issue for big name games, but for smaller games that aren't triple A titles get hurt because people just wait to buy it used.

 

I don't support the Online passes but I understand why they are there. The developers see far less money overall for the amount of copies sold overall. More money for good games means we get more good games and original games.

victorlamy
victorlamy

 @Toysoldier34  @richten71 what a bunch of fucking shit. a game gets sold along with a "spot" for the server. that one spot is all devs deserve cuz they got their share already.

 

it's literally double dipping.