GameStop Announces Losses Of $673 Million, But Believes Its Future Is Bright
Here's a look at how GameStop is doing these days.
Video game retailer GameStop has reported earnings for its fiscal fourth quarter and fiscal full year, and the results are not pretty. Before getting into the numbers, it's important to note that GameStop's fiscal Q4 and fiscal full year were one week shorter (13 weeks in the quarter compared to 14 and 52 weeks in the year compared to 53) than the previous year due to the way in which GameStop collected its numbers and data last year. As a result, GameStop's sales numbers were likely to take at least a small hit in part to having one fewer week of sales.
With that out of the way, GameStop announced fourth quarter sales of $3.1 billion, which is a decrease of 7.6 percent. The key contributors to the downturn in sales were a tough comparison to an extra week last year and the timing of the launch of Call of Duty: Black Ops 4. While there was an overall decrease in sales for the quarter, US store sales rose 3.4 percent while international stores saw revenue decrease by 2.9 percent.
New hardware sales dropped 9.8 percent in the quarter. The Nintendo Switch was a bright spot, helping offset the decline in Xbox One X sales. That was always going to be a tough comparison for Xbox One X given it launched during the previous fiscal year, and consoles typically have huge opening numbers and then taper off. New software sales for GameStop in the quarter dropped by 7.8 percent, while pre-owned sales fell further, by 21.3 percent. In terms of growing businesses, GameStop's accessories sales rose 18.8 percent (thanks to controllers and headsets), digital sales rose 4.7 percent (thanks to digital currency), and collectibles sales jumped 3.1 percent.
Overall, GameStop posted a loss of $187.7 million for the quarter, which is worse than the $105.9 million loss that GameStop recorded during the same quarter a year earlier.
Moving to the full year, GameStop's total global sales reached $8.3 billion, which is a decrease of 3.1 percent. US store sales increased 1.8 percent while international sales dropped 4.8 percent.
Looking at GameStop's various business units, it was a mixed bag for the full year. New hardware sales fell 1.3 percent, while new software sales dropped 5.1 percent. Pre-owned sales fell 13.2 percent. On the better side, accessories sales jumped 22 percent, collectibles sales rose 11.2 percent, and digital sales increased 16.5 percent.
GameStop overall posted a net loss of $673 million for the full year. That was due in part to "asset impairment charges" of $964.2 million that were "primarily related to impairment of goodwill."
Despite the difficult fourth quarter and full fiscal year, GameStop executive chairman Dan DeMatteo said in a statement that the company expects to grow in the future under the leadership of its new CEO, George Sherman.
"We are excited to move forward under George's leadership as we refine our strategic direction and implement several initiatives under development to strengthen the company for the future and drive sustainable growth and profitability," DeMatteo said.
GameStop CFO Rob Lloyd said in his own statement that the company recognises "the challenges facing our pre-owned video game business."
GameStop says it will address these issues in several ways as part of its overall ambition to save costs and improve profit. Some of the ways GameStop plans to save money in the new fiscal year is to focus on "supply chain efficiencies, operational improvements, expense savings, and pricing and promotion optimization."
"GameStop is a leader in the video game industry, and we remain committed to capitalizing on our leadership position to discover new and unique ways to meet our loyal customers' entertainment needs and attract new customers," he said.
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