GameStop executives say the arrival of new consoles by the end of this year will provide much-needed extra to its stores, but lower figures for the leading brick-and-mortar retailer look poignant.
Yesterday, the company posted some really bad results in the holiday season. Total sales for the quarter were down an astonishing 25%. But for a company that closes most of its stores, retail retailers often have a desire to compare the same store. Unfortunately, these were also down 25%.
To put that into context, you have to look at the pre-fall results of some of the entertainment sales in the past. Just before announcing the rollout in 2017, Toyota R's announced its sales for the third quarter in 2016 were down 2.2%, with same-store sales down 3%. Its previous quarter was down 4%.
Even Blockbuster's last days in 2010 weren't quite as good as GameStop's. Video chain the bank's last line of defense against bankruptcy were down 20%, following the previous quarter was down 5%.
Last year, GameStop posted a series of poor financial results. In its last quarter ended October, the company announced sales dropped 14%, while same-store sales dropped 11%. This time last year, the company announced holiday sales decreased by 5%.
In a prepared statement, GameStop chief executive George Sherman said sought to convince participants, which says the company is ready for a "new revenue stream ahead of the new console console launch in 2020," with the arrival of PlayStation 5 and Xbox Series X.
But the company the share price took a dive Yesterday, it dropped from Monday morning at $ 5.58 to $ 17 – down to $ 4.59, though it was down to $ 4.81.
Well-known financial planners are warning investors away. Looking for Alpha today said the company was facing "existing challenge questions," adding: "Downloading video games is not a GameStop requirement at all." "The GameStop is likely to be among the next segment of old-school retailers who are investing in bankruptcy," said the Motley Fool.
Although there is Sherman's confidence about the new hardware, and the company's repeated reference to the bottom of the console's final cycles, its real problems are down to consumer behavior. Used game sales, which have become a staple of the company over the last 10 years, are disappearing, as consumers spend heavy discounts on downloadable games and subscriptions, finding hard copies of games that can be sold at retail stores.
