GameStop, a US retail giant, has posted their earnings in their latest financial report, showing strong numbers across all areas. However, net income has dropped by over $300 million because of asset impairment in Q4.
The loss is attributed to GameStop’s Technology Brands Operation, which had an operating loss of $359.8 million over the quarter. This loss is a direct result of the change in dealer compensation structure at AT&T, which GameStop own.
The adjusted net income, not taking into account the asset impairment and other charges, for GameStop is $338.6 million for 2017, down from $390.9 million the year previous. In Q4 specifically, even with the net loss of $105.9 million compared to $208.7 million net income the previous year, global sales have actually increased by 15 percent to $3.5 billion.
Even with this blow to Q4 GameStop’s global sales have increased to $9.2 Billion, with a net income of $34.7 million, a rise of 7.2 percent over the whole year. New hardware sales also saw an increase to $1.7 billion, a rise of 28.3 percent, largely thanks to demand for Nintendo Switch consoles over the course of 2017. Collectibles and Merchandise rose by 28.8 percent, bringing in $636.2 million.
GameStop also saw a rise in digital sales and non-GAAP digital receipts. Excluding revenue from Kongregate, which was sold in July 2017, digital sales rose by 13.8 percent, and non-GAAP digital receipts rose by 7.1 percent. Reported digital sales rose to $189.2 million, increasing by 4.5 percent, and non-GAAP digital receipts rose to $1.2 billion, an increase of 5.2 percent.
Much like with UK retailer GAME, GameStop has seen a decrease in the sales of pre-owned titles, falling by 4.6 percent to $2.1 billion. The cause of this decline is a combination of less mint software being sold in the previous year, coupled with the fact that gamers are holding onto titles for longer now instead of trading them in.
Year-on-year hardware sales have risen to $844 million, increasing by 44 percent, and software sales have risen to $1.04 billion, increasing by 12.4 percent. The tech brand sales fell to $219.7 million, decreasing by 14.2 percent, while Collectibles and merchandising rose to $260.8 million, increasing by 22.8 percent.
GameStop CEO, Mike Mauler, told press that the company’s strategy moving forward is to focus on improving the three key areas of business the company has at the moment, tech brands, video games, and collectibles. He believes that by improving what they already have they can then look at investing in new areas of interest further down the line, with a far more solid sector baseline.