$673 million full-year loss posted by GameStop

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Recently GameStop posted their full-year financial results for 2018, highlighting the biggest loss in GameStop company history.

For the 52 week period ending on the 2nd of February 2019 GameStop’s reported net sales were down year-on-year to $8.29 billion, a decrease of 3 percent. Net profit from the previous year was $34.7 million, which this last year has changed to a record breaking net loss of $673 million.

GameStop said that as a caveat to this year’s figures the previous year’s covered a 53 week period instead of a 52 week period, which could attribute to the unfavourable comparison. However, fiscal year 2018 figures included the sale of GameStop’s Spring Mobile chain, which brought in $700 million.

GameStop said at the time of the sale of their Spring Mobile business that it marked a transition in their focus from diversification of the company to optimising their gaming and collectibles business. Collectibles were up in last year’s results to $707.5 million, an increase of 11 percent, but the core gaming business saw a drop.

Sales of new hardware saw a decrease of 1 percent to $1.77 billion, and new software sales were down to $2.45 billion, a drop of 5 percent. Pre-owned and value products saw the biggest year-on-year drop of 13 percent, down to $1.87 billion. This drop in pre-owned sales continues a years long slide in the segment, which hasn’t shown gains since 2014.

Rob Lloyd, CFO and COO of GameStop, said in a statement that the company are pleased that they have delivered fiscal 2018 results within their adjusted guidance range. The results included growth across digital, collectibles, and video game accessories. According to Lloyd new hardware sales were in line with the previous year with the exception of the additional week for that period.

Lloyd added that the company is aware of the challenges facing their pre-owned business. With 2019 ahead of them they’re ready to evolve GameStop to tackle these challenges and be more successful moving forward.

Since GameStop changed their name from Funco Land in 2000 the company has only ever posted two full-year losses. In 2000 they posted a net loss of $7 million, and in 2012 the company posted a net loss of $269.7 million. In 2000 the company’s entire revenues were totalled at $327 million, which is less than half of what they lost in 2018.

For 2019 GameStop plan a cost savings and profit improvement initiative. The plan is to make supply chains more efficient, improve operations, and optimise promotion, pricing, and expense savings. While this plan won’t have too much of an impact in 2019, the company expect that it will provide a boost to operating profits of $100 million a year.

Currently GameStop expect 2019 total sales to be down by 5 to 10 percent year-on-year.