Video game retailer GameStop disclosed weaker-than-expected revenue as consumers cut back on shopping while they waited for companies to introduce the next generation of game systems. GameStop’s forecasts for this year fell far short of analyst forecasts. The company said it expects to earn between $3.10 to $3.40 per share in its current fiscal year, while FactSet says analysts expected $3.73 a share. The stock dropped $2.99, or 12.5 percent, to $20.97.
Grapevine-based GameStop reported on Thursday that total global sales fell 13.6 percent to $3.05 billion, while consolidated comparable store sales declined 16.3 percent. As stated in the company’s holiday sales release in January, the fourth quarter was significantly impacted by weak sales of certain AAA titles and aggressive console promotions by other retailers on Thanksgiving Day and Black Friday. As a result, new hardware sales declined 29.1 percent and new software sales declined by 19.3 percent. Pre-owned sales outperformed new video games, declining 6.7 percent compared to the fourth quarter of 2015.
Collectibles sales did see an increase, rising 27.8 percent to $212.4 million, driven by strong sales of Pokémon-related toys and apparel. The company added 17 Collectibles stores during the quarter, bringing the total global portfolio to 86 stores, including 24 ThinkGeek stores in the U.S.
In 2017, the company says it will close between 2 percent to 3 percent of its global store footprint, but it anticipates it will open approximately 35 new Collectibles stores globally, and approximately 65 new Technology Brand stores.
For the full year, GameStop reported total global sales decreased 8.1 percent to $8.61 billion, while consolidated comparable store sales declined 11 percent.
“GameStop’s transformation continued to take hold in 2016, as our non-gaming businesses drove gross margin expansion and significantly contributed to our profits,” said Paul Raines, CEO, in a statement. “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 SG&A spend, rationalizing our global store portfolio, and maximizing free cash flow generation to drive shareholder value.” – The Associated Press contributed to this report.