GameStop Corp. on Tuesday announced that it has ended its efforts to pursue a sale "due to the lack of available financing on terms that would be commercially acceptable to a prospective acquiror."
The gaming and collectibles retailer, with outside financial and legal advisers, in June began reviewing "a wide range of alternatives to enhance shareholder value" that had included "discussions with third parties regarding a potential sale," according to a company press release. That effort did culminate in the sale of GameStop's Spring Mobile business, which closed Jan. 16 and generated about $735 million in immediate cash proceeds, the company said.
The board continues its search, with the help of "a leading executive search firm," for a permanent CEO, according to the release.
Thanks to its low valuation, good cash position and "increasingly flexible lease terms," GameStop seemed like an attractive buy, at least according to Jefferies analyst Stephanie Wissink, last fall.
But those attributes have failed to help unload the company's assets, aside from its mobile business. In addition to the steady move of gaming to streaming, the company has struggled to keep a chief executive after the untimely death of longtime chief J. Paul Raines, who left early last year to undergo treatment for an illness and died in March. In the summer, GameStop appointed Shane Kim, a former Microsoft executive who has served on its board since 2011, after Michael Mauler left just months after being promoted to the position, but Kim has made it clear he doesn't want the job.
The retailer showed some strength at the holidays. While total global sales for the nine weeks ended Jan. 5 fell 5% year over year to $2.63 billion, total comparable store sales rose 1.5%, which reflected a 3.6% increase in the U.S. COO and CFO Rob Lloyd said that the company's strong holiday, which came after relatively strong sales last season, was thanks to "strong sales in accessories, collectibles and digital which more than offset the decline in pre-owned sales and new video game hardware sales."
But it can't shake ongoing weakness, either, "in the company's new video game and pre-owned segments, emphasizing the importance of the strength of new game titles as well as the company's vulnerability to new hardware cycles and a weakened pre-owned software and hardware environment," Moody's Investors Service analyst Adam McLaren said in comments about GameStop's holiday sales that were emailed to Retail Dive.
The company is now mulling what to do with the money it made from its mobile business sale. Options include reducing debt, funding share repurchases, reinvesting in core video game and collectibles businesses to drive growth, or some combination of those, according to the release.