GameStop’s Earnings Report Shows Dismal Holiday Sales – 150 Stores Closing in 2017
It looks like GameStop had a rough Q4 in 2016. In an earnings report released this past Thursday, the world’s largest video game retailer has announced that it will be closing 2-3% (roughly 150) of the company’s stores, following a significant decrease in revenue compared to last year’s fourth quarter earnings. In comparison to the fourth quarter of 2015, new software sales dropped by 19.3%, while new hardware sales went down by 29.1%. The decline in new hardware sales is rather surprising, given that both the PlayStation 4 Pro and PlayStation VR both launched at the beginning of last year’s holiday season.
According to the report, GameStop is attributing the weak fourth quarter sales to two primary factors, the first being “aggressive console promotions by other retailers on Thanksgiving Day and Black Friday.” While no retailers are specifically mentioned, the likeliest culprits are big-box retailers like Best Buy, Walmart, and Target, not to mention their biggest online competition, Amazon.
GameStop has also blamed the “weak sale of certain AAA titles” for the drop in new software sales. Though no titles were named, we know that Watch Dogs 2 and Call of Duty: Infinite Warfare under-performed at launch. Despite Final Fantasy XV‘s massive success, a less than successful ‘COD game’ launch can make any retailer’s earnings report look less than stellar.
Looking at 2017, Technology Brands and Collectibles are expected to generate another year of strong growth, and new hardware innovation in the video game category looks promising.”
Despite the seemingly appropriate timing, GameStop’s massive store shuttering is actually part of a “transformation plan” that involves a heavier focus on “Technology Brands” and “Collectibles”. GameStop’s Technology Brands (think Spring Mobile, AT&T, and Cricket Wireless) saw an earnings increase of 63.7% (from $27 million to $44.2 million), while the Collectibles business saw an increase of 59.5% over fiscal 2016. This year, the retailer plans on opening 35 new Collectibles stores globally, and 65 new Technology Brands stores. GameStop currently has more than 7,500 locations in 14 countries.
So, what are your thoughts on the latest numbers from GameStop? Do you think the retailer will bounce back this year? Let us know what you think in the comments section below, and as always, stay tuned to DFTG for all the latest and greatest in the gaming world! Don’t forget to follow us on Twitter for our 24/7 news feed!
Ryan "Cinna" Carrier2485 Posts
Ryan is the Lead Editor for Don't Feed the Gamers. When he isn't writing, Ryan is likely considering yet another playthrough of Final Fantasy IX. He's also the DFTG cinnamon bun.