GameStop Recommits to Diversification After Games Unit Has 19% Comp Decline
GameStop remains focused on a “transformation plan” to grow its non-gaming business, evaluate store closures and execute “financial discipline,” said CEO Paul Raines in a Friday 8-K SEC filing, as sales at the company dropped 16.4 percent to $2.5 billion…
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for the nine-week holiday shopping season ended Dec. 31. In the most recent earnings report, Raines highlighted GameStop’s diversification into digital, technology brands and collectibles to offset expected declines in game sales. The retailer's same-store sales in the holiday season fell by 18.7 percent, but the chain cited improvement from November (minus 26.6 percent) to December (minus 13 percent) that it expects to carry through January. Raines blamed lower results on “industry weakness, promotional pricing pressure and slower in-store traffic.” In its shrinking game segment, hardware revenue plunged 30 percent on a bigger-than-expected decline in PS4 and Xbox One sales, and sales of new video game software sank 23 percent, it said. GameStop's collectibles business grew 27 percent to $177 million, driven by Pokémon products, and technology brands revenue grew 44 percent to $192 million for the holiday period, driven by “strong sales” of the iPhone 6s, iPhone 7 and Samsung Galaxy 7 smartphones, it said. GameStop shares closed 8 percent lower Friday at $22.74.