GameStop’s earnings for the nine week period that constituted 2019’s holiday season were dismal compared to the same time frame in 2018. During last year’s holiday season, the retailer suffered a 27.5 percent decline year-over-year, falling “well below expectations.” This unexpected blow to the business has caused the company to reevaluate its financial forecast for the remainder of 2020.
In a press release, GameStop noted that the 27.5 percent decline is “indicative of overall industry trends impacting the video game industry.” Such results were also a response to the lack of new hardware from the platform holders, as well as a reported decline in sales of game software during the month of December. To account for all of the above, GameStop is adjusting its sales expectations for this year.
This much has been reflected in the retailer’s earnings expectations for 2020, which now estimates a year-over-year decline “in the range of 19% to 21%.” In GameStop’s Q3 sales report, which covered July 1st to September 30th, the company’s “full-year guidance,” or financial forecast, predicted a year-on-year decline in the “high-teens” percentage-wise. Even this estimation was changed from initial expectations that predicted a decline between 5 to 10 percent.
GameStop anticipates the “challenges” it encountered during last year’s holiday season to persist throughout 2020. However, CEO George Sherman sounds confident in the company’s ability to “optimize profitability.” One step seems apparent in the recent closure of 19 “unprofitable” EB Games stores in Australia. A storewide redesign initiative serves as another one of GameStop’s “long-term action plans.” Hopefully, these shifts will hold the retailer over until the next-generation of consoles hit stores shelves this holiday season.
[Source: GameStop via GamesIndustry.biz]