GameStop shares plummet on reports of lost sales
Shares of GameStop (GME) fell more than 13 percent Friday after the company reported sales declines in almost all of its segments during the fourth quarter.
GameStop reported Thursday that hardware sales declined 29.1 percent, and new software sales fell by 19.3 percent for the quarter — two categories that were once key in boosting revenue for the retailer.
The Texas-based company said fiscal fourth-quarter global sales decreased 13.6 percent to $3.05 billion, while consolidated comparable sales — a metric monitored closely for retail companies by Wall Street — declined 16.3 percent, falling in line with analysts' estimates, according to FactSet.
In 2017, GameStop said it expects to close between 2 to 3 percent of its global store footprint, a sign that traffic at its brick-and-mortar locations has slowed. The company also said Thursday that its video game category has become "weak."
"The fourth quarter [ended Jan. 28] was significantly impacted by ... aggressive console promotions by other retailers on Thanksgiving [Day] and Black Friday," the company wrote in its earnings release. GameStop is facing more competition from big-box retailers such as Target (TGT) and Wal-Mart (WMT), and e-commerce giant Amazon (AMZN).
Moving forward, GameStop will no longer provide quarterly earnings nor same-store-sales guidance, Chief Financial Officer Rob Lloyd said in a statement. "We believe that providing only annual guidance will reduce investor distraction as we continue to diversify the company and seek to maximize long-term shareholder value," Lloyd said.
On Thursday, GameStop reported adjusted quarterly earnings of $2.38 per share, topping a Thomson Reuters estimate of $2.28, but coming in 2 cents lower than the same period one year ago.
With Friday's steep declines, shares of GameStop are down more than 30 percent over the past 12 months and are down more than 18 percent year-to-date.
Shares closed the down around $20 per share, far below an all-time intraday high of $63.77 reached in 2007 but nowhere near an all-time intraday low of $3.75 per share, which occurred in 2003.
GameStop year-to-date performance
Source: FactSet
Correction: This story was revised to correct the spelling of Rob Lloyd's last name.
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