GameStop on Tuesday reported that in its fourth quarter, which had one less selling week than the year-ago quarter, total global sales fell 7.6% to $3.1 billion, as consolidated comparable store sales rose 1.4% (with a 3.4% comp boost in the U.S. and a 2.9% comp decline internationally).
Net loss in the quarter widened to $187.7 million from the $105.9 million loss of the year-ago quarter, results that include asset impairment charges and other items of $334.5 million, according to a company press release. Excluding those charges and other items, adjusted net income from continuing operations for the quarter fell 16.2% to $148.5 million, from $177.2 million a year ago.
For the full year, also with one less selling week, total global sales from continuing operations fell 3.1% to $8.3 billion, store comps fell 0.3% (rising 1.8% in the U.S. and falling 4.8% internationally), and net income swung to a loss of $673 million from its year-ago profit of $34.7 million.
GameStop is set to embark on a turnaround strategy with a new CEO, George Sherman, who arrives in a couple of weeks, plus a couple of new board members coming out of an agreement with investment firms Hestia Capital Partners LP and Permit Capital Enterprise Fund LP, which had made some demands last month out of concern over the company's stock value.
But its retail segment is taking a beating as gaming increasingly moves to online streaming. Without much recourse to differentiate much of its own merchandise — hardware and games can be found many other places — the retailer has always moved to diversify its retail portfolio, getting into collectibles (which have proven to be lucrative with double-digit growth anticipated again this year, Chief Operating Officer Robert Lloyd told analysts on Tuesday) and even mobile sales (a less successful venture the company spun off last year).
Its fourth quarter sales picture tells the story: New hardware sales fell 9.8%; new software fell 7.8%; accessories rose 18.8%; pre-owned sales fell 21.3%, "reflecting declines in hardware and software;" digital receipts rose 4.7% to $432.5 million; and collectibles sales rose 3.1% to $268.8 million, with growth in both domestic and international stores.
But the company's venture into mobile was a lesson in not venturing too far, and Dan DeMatteo, GameStop's executive chairman and a co-founder, told analysts that the retailer would focus more on its core businesses, something he said the company's new efforts in e-sports will help it do.
While GameStop was unable to sell itself last year because it couldn't find satisfactory terms, DeMatteo also said that the company left the process encouraged by the interest it did receive and took that as a sign of what he called its "powerful brand." In part thanks to its sale of the mobile business, the company is able to pay down debt, and will focus on garnering efficiencies within its store fleet, supply chain, merchandising and workforce, he said. The company will be working with a consulting firm to achieve that, he also said, adding, "This is not simply a cost-cutting exercise. ... We recognize the changes needed in our traditional physical video game retail business model and we're committed to addressing that."