As expected, GameStop Dec. 10 reported a third-quarter (ended Nov. 2) net loss of $83.4 million, which was an improvement of sorts from a net loss of $488.6 million during the previous-year period.
The narrowed loss is hardly a bright spot since the nation’s largest video game retailer reported significant declines in every business segment except collectibles.
Global sales decreased 25.7% to $1.4 billion, driven by a consolidated comparable store sales crease of 23.2%. New hardware sales decreased 45.8%, reflecting anticipated next generation console launches in 2020. New software sales decreased 32.6%, 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 13.4%, pre-owned sales declined 13.3% with declines in hardware and software. Collectibles sales increased 4.3%, with continued growth in both domestic and international stores.
Yet, collectibles, which includes memorabilia, T-shirts, action figures, associated merchandise and has been the chain’s lone growth area, saw revenue grow just 4.3% — down from 14% last year.
“Our third quarter results continue to reflect the prevailing industry trends, most notably the unprecedented decline in new hardware sales seen across the market as the current generation of gaming consoles reach the end of their lifecycle and consumers delay their spending in anticipation of new hardware releases,” CEO George Sherman said in a statement.
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With console makers set to introduce new and innovative gaming consoles in late 2020, the gaming industry has been on life support as gamers cut spending. In addition, the industry — similar to other packaged media — is migrating toward digital distribution.
“We anticipate this trend to continue until the fourth quarter [next year],” Sherman said.
Regardless, the CEO said GameStop remains on track to achieve $200 million annualized operating profit improvement goal by 2021.
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“We believe our strategic initiatives will enable to us to achieve our long-term growth and profit objectives as we fully leverage our unique leadership position and brand in the video game space,” he said.
Wall Street wasn’t impressed. GameStop shares fell 15% in aftermarket trading.