Late last week, GameStop announced that it will be shutting down 150 of its stores. The news was released following the company’s low Q4 results reported on March 23rd. This also led to a decrease in its shares value.
GameStop And Its Market Segment
GameStop Corp. is a Grapevine, Texas-based company. It activates in the video game, wireless services, and consumer electronics retail area. Founded back in 1984, the company operations expand across the globe. GameStop operates over 7,100 stores. These can be found in the United States Canada, Europe, New Zealand, and Australia.
Last week, the gaming retailer released its fourth quarter reports. Its earnings call revealed lower than expected results. The company’s Q4 global sales marked a 13.6 percent fall, to reach $3.05 billion. GameStop’s new software sales reportedly fell by 19.3 percent over the quarter. Its hardware sales also decreased by 29.1 percent.
These two categories were especially relevant for the company’s current situation. They were once considered key elements in boosting the GameStop revenue.
Following the earnings call, the company released an announcement. This came on March 24th and revealed that GameStop will be shutting down some of its stores. The retailer will be closing around 2 to 3 percent of its locations, at a global level. Roughly, this would target around 150 of its stores.
Most have taken this decision as a sign of the following. GameStop’s brick-and-mortar stores may be visited by fewer customers than before. The company itself announced that one of its major categories, the game one, has become “weak”. GameStop also pointed out the following:
“The fourth quarter [ended Jan. 28] was significantly impacted by aggressive console promotions by other retailers on Thanksgiving Day and Black Friday.”
As it is, the company is reportedly facing an increasing competition from Amazon, the e-commerce giant, as well as big-box retailers such as Walmart and Target.
The Aftermath Of The Retailer’s Q4 Report
GameSpot’s release of its fourth quarter report paved the way for its store announcement. Although the retailer revealed that it will be closing down some of its locations, it has yet to release an exact list. It remains to be seen if the company will offer further information on the matter.
GameSpot also revealed that it will stop providing quarterly earnings. It will also stop offering same-store sales guidance. According to Rob Lloyd, the company will only release an annual guidance. Lloyd is the GameSpot Chief Financial Officer. He also stated that such a sole report should reduce the investor “distraction”. It will do so as the retailer will seek to “maximize long-term shareholder value”.
Following its Thursday announcements, GameSpot’s shares marked a decrease. Over the past 12 months, the retailer’s shares fell by over 30 percent, including the Friday decline. All in all, they are currently around 18 percent lower year-to-date.
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