×

GameStop Stock Plummets in Face of Dire 2019 Physical Video Game Sales Predictions

GameStop expects its sales will drop 5% to 10% in 2019 compared to last year, the company announced in its earnings report this week. News of the predicted drop, coupled with the company’s report of a drop in new hardware and new software sales in its fourth quarter, was followed by a precipitous drop in its stock, down 13% to $8.82 a share Wednesday morning.

The drop in stock value — the lowest its been since 2004 — as well as drops in reported sales and expected sales come as GameStop continues to right itself in a video games market that increasingly sees physical sales as irrelevant.
The retailer appointed George Sherman as its new chief executive officer last month. Sherman replaces Shane Kim, who’s served as interim CEO since May 2018. Shane, a former Xbox executive, took over the role after Michael Mauler resigned after just three months on the job.

A week after announcing Sherman’s appointment, GameStop detailed its plans to expand into esports as it continues to refocus its business more on the culture of video games, rather than just their sales.

“We are aiming to become the official pop warner league of esports where GameStop provides fun and unique cultural experiences for player development while preparing the next generation of professional gamers – it doesn’t get any better for amateurs of all ages looking to learn and compete at the highest level,” Frank Hamlin, chief marketing officer for GameStop,  said in a prepared statement at the time.

Despite being the largest brick-and-mortar video game retailer in the U.S., GameStop has been struggling financially due, in part, to the growth of digital games distribution, coming of game streaming, and online retailers like Amazon. It saw a 5% drop in global holiday sales compared to the same nine-week holiday period in 2017. It also recently sold its Spring Mobile business for $700 million and will use the proceeds to reduce its outstanding debt, repurchase shares, and reinvest in its core gaming and collectibles business. GameStop sought a potential buyout with private firms last year, but ended its efforts in January after failing to secure a deal, sending its shares tumbling more than 27%. It blamed a “lack of available financing on terms that would be commercially acceptable to a prospective acquirer.

In its fourth quarter quarterly report, released Tuesday, GameStop reported that new hardware sales decreased 9.8%, new software sales decreased 7.8%, pre-owned sales declined 21.3%, but that accessories, digital sales, and collectible sales all increased. The company saw a fourth-quarter net income loss of $187.7 million in the quarter.

Total global sales for the 2018 fiscal year decreased by 3.1% to $8.3 billion, GameStop reported.

For the coming fiscal year, the company said it is “embarking on a cost savings and profit improvement initiative designed to strengthen the organization for the future and support long-term improved financial performance and profitability.”

“As we think about 2019 and beyond, we recognize the challenges facing our pre-owned video game business and are prepared to address them as we continue to evolve our business model going forward,” said Rob Lloyd, chief operating officer and chief financial officer, in the financial report. “Importantly, we will continue to leverage our powerful brand to drive growth and, with a new cost savings and profit improvement initiative in place, we will focus our efforts on driving profitability. GameStop is a leader in the video game industry, and we remain committed to capitalizing on our leadership position to discover new and unique ways to meet our loyal customers’ entertainment needs and attract new customers.”

More Gaming

  • Frank Pearce - Blizzard Entertainment

    Blizzard Co-Founder Frank Pearce Exits After 28 Years

    Frank Pearce, one of the three co-founders of game developer Blizzard Entertainment, is leaving the company. The announcement of Pearce’s exit comes less than a year after president Michael Morhaime, another Blizzard co-founder, left the company. J. Allen Brack, executive producer of “World of Warcraft,” took over the position as president of Blizzard. Related 'Lord [...]

  • Fortnite Battle Royale

    How 'Fortnite' Fans Can Earn Loot by Watching YouTube Videos

    Epic Games and YouTube have teamed up with a special offer for “Fortnite” players — giving players of the popular battle-royale game rewards when they watch “Fortnite”-premiered content on the video platform. The catch: You have to watch at least 20 minutes of “Fortnite” special content or live esports broadcasts to receive the loot. Under [...]

  • Google Stadia Pro to Include 1

    Google’s Stadia Game Streaming Service to Include Free Monthly Game

    Google has been busy sharing additional details about its upcoming game streaming service Stadia, clearing up some confusion in the process. Stadia’s pro subscription tier, which will cost $10 per month, won’t be a Netflix-type subscription service. However, subscribers will get free games at the rate of about a title per month. That’s according to [...]

  • The Lion King

    'Lion King' VFX Supervisor Rob Legato to Keynote at the 2019 View Conference

    Rob Legato, visual effects supervisor of “The Lion King,” “The Addams Family” co-director Conrad Vernon and Baobab Studios’ co-founder and chief creative officer Eric Darnell, director of the VR studio’s Emmy- and Annie-winning VR short “Crow: The Legend,” are rounding out the keynote speakers at this fall’s 20th edition of the View Conference in Turin, [...]

  • Nintendo Switch

    Nintendo Releases Updated Switch With Better Battery

    Nintendo just refreshed its wildly successful Switch game console, but the company isn’t giving existing Switch owners many reasons to upgrade: The renewed game console comes with a better battery that guarantees up to 9 hours of game play, while otherwise sticking with the same design and features of the original Switch. The new model [...]

  • Spotify logo is presented on a

    U.S. Consumers to Spend $26 Billion on Music, Video Subscriptions This Year

    U.S. consumers are expected to spend a combined $26 billion on music and video subscription services this year, according to new estimates from the Consumer Technology Association. That’s up from $20.4 billion in 2018, and nearly twice the amount spent on such services in 2017. Propelled by the continued success of Apple Music and Spotify, [...]

  • Gears 5 - Xbox Game Studios

    'Gears 5' Will Exclude Smoking Depictions After Concerns Raised by Youth Anti-Tobacco Org (EXCLUSIVE)

    “Gears 5,” the forthcoming installment in the “Gears of Wars” third-person shooter game franchise, will be a smoke-free establishment. The game, set for Sept. 10 release, comes from Xbox Game Studios and game developer The Coalition. The decision to remove all smoking references from “Gears 5” came after not-for-profit anti-smoking organization Truth Initiative approached Turner, [...]

More From Our Brands

Access exclusive content