Multiple electronics chains have lost business in the past few years, with some even being forced to close down. This is due to CDs, DVDs, and video games being so heavily accessible online that people rarely go into stores such as GameStop to purchase them, since there is no need. Gaming platforms such as Steam and Oracle, as well as the X-Box Live, and Playstation stores, have also given customers instant access to the things they want, and as such GameStop has suffered such a sufficient loss of sales that their shares have plummeted.
According to CNBC, hardware sales for the company fell 29.1 percent in the past four months, with new software purchases dropping 13.6 percent to just over three billion dollars in revenue. A decline of 16.3 percent was recorded for consolidated comparable sales, although analysts were not surprised by this as they had estimated these numbers for this fiscal quarter.
A statement was given earlier this year by GameStop executives, who confirmed rumors that between two and three percent of their stores would be closing, with customers in and around those locations having to go online from then on to make their purchases. In-store video game sales, they continued, had become “weak” over time with less and less individuals wishing to obtain hard copies rather than simply pay for and download them online. As reported by The Verge, up to 150 locations in total will be shut down over the next nine months.
In the company’s official earnings release report, GameStop admitted that the decline in sales and the necessary closing of stores was due to the “aggressive console promotions” by retailers other than their company, taking place on Black Friday, one of the most popular shopping dates of the year. These included Wal-Mart, Amazon, and Target.
WTTV reveals that the decline in shares led to the company’s CFO, or Chief Financial Officer, making the decision that GameStop would no longer be releasing quarterly reports of business earnings, but instead publish them only once a year. This way, “investor distraction” will be reduced and CEOs will be able to diversify the company enough to “maximize long-term shareholder value.”
As of Thursday, quarterly earnings sat at $2.38 a share, which was 10 cents more than an estimate by Thomas Reuters, but still fell two cents short of this time last year. Over the past 12 months, GameStop shares have dropped 30 percent and the year-to-date decline is at 18 percent. The best year for the company was 2007, when an all-time intraday share high of $63.77 was reached. Currently, the share price is around $20.
By Lorelai Zelmerlow
Photo Courtesy GameStop