GameStop: Surviving the Waiting Game

As the world’s largest video game retailer, GameStop has big expectations for new generation consoles coming a year from now from Sony PlayStation and Microsoft’s Xbox platforms.

In the meantime, the Grapevine, Tex.-based chain continues to absorb fiscal body blows as gamers halt spending on packaged media and/or explore digital alternatives.

Global sales decreased 25.7% to $1.4 billion in the most-recent fiscal period. New hardware sales plummeted 45.8%, while new software sales decreased 32.6%.

GameStop CEO George Sherman

“While the near-term top line environment remains challenged, we do not believe these results are indicative of what we would expect for the business in the long term,” CEO George Sherman said on the fiscal call.

As previously reported, GameStop has begun to divest operations in the Nordics, including Denmark, Finland, Norway and Sweden.

“While this will take several months to complete, we believe this effort will yield roughly $15 million in [pre-tax earnings] improvement,” Sherman said.

GameStop also reduced in-store inventories 30%, in addition to investing $115 million in the company and repurchasing 22 million shares for a total investment of $175 million in the quarter.

“Despite the near-term demand headwinds for current generation gaming hardware and software products, GameStop’s evolution as an industry leader to reposition the business model are on track,” Sherman said.

The executive said the chain is also in the process of “re-imagining” the GameStop in-store concept with new layout tests in 12 stores in the Tulsa, Okla. region.

“We’re very encouraged by what we are learning from the numerous customer immersive experiences we are testing,” Sherman said.

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