GameStop Widens Q4, Fiscal Year Losses Due to Impairment Charges

GameStop April 2 reported fourth-quarter (ended Feb. 2) loss of $187.7 million, up 77% from a loss of $105.9 million during the previous-year period. Revenue dipped 7.7% to $3 billion from $3.3 billion last year.

The world’s largest video game retailer attributed the loss to asset impairment charges and other items of $334.5 million. Without the charges, adjusted net income from continuing operations decreased 16.2% to $148.5 million, compared to adjusted net income from continuing operations of $177.2 million in the prior- year quarter.

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For the fiscal year, the net loss topped $673 million compared to net income of $34.7 million in fiscal 2017. The loss included asset impairment charges and other items of $964.2 million primarily related to impairment of goodwill. Excluding asset impairment charges and other items, GameStop’s adjusted net income from continuing operations for fiscal 2018 decreased 22.9% to $218.4 million

“This past year was a pivotal one for GameStop, capped by retail industry veteran George Sherman’s appointment as CEO beginning April 15,” Dan DeMatteo, executive chairman, said in a statement.

DeMatteo said the sale of Spring Mobile better positioned the retailer to drive shareholder value with an “intense focus” on leveraging the company’s global gaming and collectibles business – in addition to the announced paydown of $350 million of outstanding notes. The executive said GameStop is upbeat with the pending arrival of 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.

New hardware sales decreased 9.8%, with an increase in Nintendo Switch sales offset by a decline in Xbox One X sales due to its strong launch in the prior year and the impact of the 53rd week in fiscal 2017.

New software sales decreased 7.8%, driven by key titles launching earlier in the year compared to last year and the impact of the 53rd week in fiscal 2017. Accessories sales increased 18.8% on the continued strength of controller and headset sales.

Pre-owned sales declined 21.3% reflecting declines in hardware and software. Digital receipts increased 4.7% to $432.5 million, primarily driven by strength in sales of digital currency. Collectibles sales increased 3.1% to $268.8 million, with continued growth in both domestic and international stores.

Based on initial estimates, GameStop said it is working to achieve annualized operating profit improvements of approximately $100 million in fiscal 2019.