GameStop just can’t catch a break, and the company is running out of lives.
The Texas-based retailer’s sales through the holiday season fell a whopping 27.5% compared to the 2018 season. Comparable same-store sales for the season — the shortest since 2013 — fell 24.7% compared to a 1.5% increase during the previous holiday run. The news follows a downward trend that has been accelerating over the past year, with a 25% decline for Q3 following a 14.3% drop in the second quarter. The company will report its Q4 and full-year earnings in March.
Despite the dismal results, GameStop CEO George Sherman, who joined the company last April, has attempted to place a positive spin on things, comparing the results to the overall industry slide ahead of a new console year.
“We expected a challenging sales environment for the holiday season as our customers continue to delay purchases ahead of anticipated console launches in late 2020,” Sherman says. “However, the accelerated decline in new hardware and software sales coming out of Black Friday and throughout the month of December was well below our expectations, reflective of overall industry trends. On a positive note, we continued to see growth in the Nintendo Switch platform, which supports our view that our sales will strengthen as new consoles and innovative technology are introduced.”
In recent months, GameStop has announced plans to close as many as 200 of its underperforming stores. The company went through rounds of layoffs at the corporate level in August and November, shuttered its long-running Game Informer magazine, and continues to wind down what’s left of its ThinkGeek subsidiary, which effectively ceased to exist last summer.
Last July, GameStop revealed plans to reinvent its stores by entering into a strategic partnership with R/GA — a global innovation and design firm — with a goal of creating “unique in-store experiences” as the company seeks to “re-affirm its place in the video gaming culture.” Little has been heard about the initiative since, but other players are growing in the same space.
“While we expect the challenges that we faced in the fourth quarter to continue into fiscal 2020, we believe we have the right long-term action plans in place to optimize profitability and increase new revenue streams in advance of new console introductions for holiday 2020,” Sherman adds. “We look forward to delivering progress against our strategy as we move through the year.”
