GameStop Corp. shares tumbled 8.1 percent after the video game retailer said holiday revenue dropped because of discounts and weak sales of new “Call of Duty” and “Titanfall” games. The stock shed $1.99 to $22.73.Plagued by heavy promotions, soft store traffic, and double-digit sales declines in hardware and video games, the chain’s overall sales fell 16.4 percent to $2.5 billion.
The Grapevine-based video game and electronics retailer said total comparable store sales decreased 18.7 percent. Comp trends improved from November to December (-26.6 percent in Nov. and -13 percent in Dec.) and are expected to continue to improve in January, the company said in a news release.
“During the holiday period, sales in the video game segment were impacted by industry weakness, promotional pricing pressure and lower in-store traffic, amidst a difficult holiday season for many retailers,” said Paul Raines, GameStop CEO. “We are disappointed with our overall results, but looking broadly, we did see continued growth in our non-physical gaming businesses and we expect this category to approach 40 percent of our earnings in fiscal 2016. As we look forward to 2017, we remain focused on our transformation plan, which includes growing our non-gaming businesses, right-sizing our global store portfolio by continuously evaluating non-productive stores for closure, and maintaining strong financial discipline, including reducing SG&A by $100 million by 2019.”
GameStop’s non-gaming businesses showed some growth, which is part of the company’s strategy going forward. Customers going to purchase Pokémon products and collectibles resulted in sales increases of 27.1 percent to $176.9 million, with year-to-date sales reaching the company’s guidance of $450 million to $500 million.
The company’s technology brands revenues, not included in comparable store sales, grew by 44 percent to $192.4 million, the increases driven by store growth and strong sales of the iPhone 6s, iPhone 7 and Samsung Galaxy S7. – The Associated Press contributed to this report.