GameStop Struggles to Stay Afloat on Low Console Sales

Sales are down at GameStop, across the board, as the retailer posted first quarter fiscal 2019 numbers are down 13.3 percent, largely on slowing demand for both new and pre-owned hardware and software.  

For the quarter ending May 4, 2019, the company reported overall global sales of $1.5 billion. This is significantly down from $1.8 billion, last year.  In addition, net income for the first quarter fell from $28.2 million, last year, to a dismal $6.8 million.  However, the company reminds that numbers from 2018 had a little help from the sale of Spring Mobile.  

As a matter of fact, the only sector in which GameStop saw any growth was collectibles and accessories.  Year-over-year, the store saw a bump of 10.5 percent and 0.6 percent, respectively, in these areas only.  The other categories declined between 4 and 35 percent, year over year. 

Unfortunately, new hardware sales plummeted the most with a decrease of 35 percent.  This decline is definitely a result of fewer Xbox One and Playstation 4 sales, despite rising sales in Nintendo Switch consoles.  But even the store’s true bread-and-butter, pre-owned sales, saw significant decline.  Including both hardware and software, pre-owned sales fell more than 20 percent; new software sales also fell—more than 4 percent—mainly because launch titles were less exciting this year than the year(s) before. 

Of course, the next Xbox and Playstation models are just around the corner so it is easy to see why gamers are no longer interested in brand new models from this console generation.  This could help turn things around when the new systems arrive, which is most likely in late 2020 (at the earliest). 

In the meantime, the retailer is looking at more ways to improve outlook.  For one, GameStop will likely get rid of their share dividend, which could save $157 million per year.  The company is also looking at merging ThinkGeek’s online collection sales with the main GameStop website in a new partnership.

At the end of the, all of this has had quite a negative impact on Wall Street.  Shares of GameStop Corp plummeted 26 percent when it was revealed that the video game retailer halted its quarterly dividend with a first-quarter revenue report down more than 13 percent.  

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