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.