GameStop Posts Pre-Announced Q4 Loss

GameStop, the world’s largest video game retailer, March 28 reported a fourth-quarter (ended Feb. 3) net loss of $105.9 million compared to income of $208.7 million during the previous-year period. Revenue topped $3.5 billion from $3 billion last year.

As previously reported, GameStop incurred $406.5 million ($311 million after taxes) in asset impairment charges related to third-party (AT&T) mobile phone sales in its technology brands division.

Regardless, same-store store sales grew 12.2% (14.2% in the U.S. and 8.3% internationally).  New hardware sales increased 44.8%, led by demand for Nintendo Switch, and new software sales increased 12.4% driven by a strong title lineup. Pre-owned (used) game sales declined 2.6%.

Digital sales increased 10.6% to $413 million, while collectibles sales (trend, action figures, posters, trading cards, etc.) increased 22.8% to $260.8 million, driven by continued expansion of licensed merchandise offerings and targeted promotions during the holiday period.

Technology sales decreased 14.2% to $219.7 million, driven primarily by the previously disclosed change in AT&T’s dealer compensation structure. Excluding the impairment charges, operating income decreased 8.5% to $31.1 million from $34 million in the prior-year quarter.

CEO Mike Mauler said that while fiscal 2017 delivered a “solid performance,” GameStop going forward would focus on three key business units: games, collectibles, and technology brands.

“We plan to pause on investing in additional new businesses or acquisitions and focus on the fundamentals of improving the businesses that we already have,” Mauler said. “Focusing on the basics of retail operational excellence across the organization will maximize our free cash flow, improve our performance and, ultimately, deliver returns for our shareholders.”

Mauler was named CEO in February when long-time CEO Paul Raines stepped down for health reasons. Raines died March 5 following reoccurrence of cancer.

 

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