GameStop Q4 revenues fall 13.6%

Global games retailer GameStop has reported year-on-year drops in both revenue and income.

Revenues for the quarter ending January 28th fell 13.6 per cent to $3.05bn, while net income dropped 18 per cent to $208.7bn. Adjusted earnings were down by three per cent. Comparable store sales declined by 16.3 per cent internationally and 20.8 per cent in the US.

The company said that weakening games sales due to the aging generation of consoles and a few triple-A flops were the main culprit, along with strong competition from retail rivals throughout the Black Friday period.

Hardware and software sales were both down sharply, at 29.1 per cent and 19.3 per cent respectively. Digital receipts were also down, falling 7.7 per cent year-on-year. Going the other way were Technology Brand sales, which soared 43.9 per cent. Collectibles also grew, jumping 27.8 per cent year-on-year thanks to the opening of more dedicated stores.

Full year sales were down 8.1 per cent with comparable store sales falling by 11 per cent. GameStop’s non-games business throughout the period increased from 24.5 per cent of its total the previous year to 36.9 per cent this year.

GameStop’s transformation continued to take hold in 2016, as our non-gaming businesses drove gross margin expansion and significantly contributed to our profits,” CEO Paul Raines said. Meanwhile, the video game category was weak, particularly in the back half of 2016, as the console cycle ages.

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. As we continue our transformation plan, we will also be focused on managing (sales and administrative) spend, rationalizing our global store portfolio, and maximizing free cash flow generation to drive shareholder value.”

Looking at the current fiscal year, GameStop says sales could fall or climb by as much as two per cent. It also intends to open an additional 35 new collectibles stores and 65 new tech brand stores, suggesting the start of a move away from games as its core market.

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