September 10, 2019
As expected, fiscally challenged GameStop Sept. 10 posted second-quarter results that continue to question the world’s largest video game retailer’s future amid a retail gaming landscape in flux.
GameStop’s net loss of $415.3 loomed large over a net loss of $24.9 million in the prior-year quarter, which included the sale of Spring Mobile business.
The quarter included asset impairment charges and other items of $400.9 million primarily related to impairment of goodwill. Without the impairment charges, the net loss would have been $32 million.
With manufacturers Sony and Microsoft slated to launch new hardware consoles in 2020, the market continues to suffer from an indifferent consumer.
New hardware sales decreased 41.1%, reflective of recent announcements for next generation console launches in 2020. New software sales decreased 5.3%, with growth in Nintendo Switch software titles more than offset by weaker title launches across other consoles in the quarter compared to last year. Accessories sales decreased 9.5%.
Pre-owned game sales declined 17.5% with declines in hardware and software. Digital receipts decreased 11.2% to $227.2 million due to weaker title launches in the quarter compared to last year.
Lone bright spot: Collectibles sales increased 21.2%, with continued strong double-digit growth in both domestic and international stores.
Regardless, CEO George Sherman said he remains locked on the “correct strategic path” to leverage the chain’s “unique position and brand” in the video game industry.
Sherman’s turnaround is based on four tenets, which include, optimizing the core business through efficiency and effectiveness; creating a social and cultural hub of gaming within each GameStop store; building “compelling” digital capabilities, and transforming vendor and partner relationships for an evolving gaming industry.
“We are committed to acting with a sense of urgency to address the areas of the business that are critical to achieving long-term success and value creation for all our stakeholders,” Sherman said in a statement.
Wall Street is running out of patience. GameStop shares fell nearly 11% in aftermarket trading.