Gamestop recently reported their financial results for the first quarter of 2019. The results were prefaced by a statement from George Sherman, the company’s newly appointed CEO, in order to set expectations.
In his statement he said that since his appointment to CEO in April he’s been conducting a thorough review of Gamestop, working closely with all teams so that operations and financial performance might be improved. Sherman’s goal is to address the issues facing Gamestop with exactness and urgency.
Sherman believes that together everyone at Gamestop will transform the business and shape a strategy for the company’s future. A go-forward leadership team will spearhead the transformation efforts, which will take multiple years to come to fruition. Capital allocation is paramount to Sherman’s plan, but the overall goal for the business’ transformation will be achieved through a dedicated approach to the core values of the company.
The financial results for the quarter that ended on May 4, 2019 showed a drop in revenues of 13.3 percent to $1.5 billion. Net income too was down at $6.8 million compared to $28.2 million for the same period last year.
The drop in both revenue and net income was attributed to multiple segments of Gamestop. New hardware sales saw a drop of 25 percent to $233.5 million, with a drop in PlayStation 4 and Xbox One sales offset mostly by an increase in Nintendo Switch sales.
Sales of new software were down by 4.3 percent to $446.4 million, which is thought to be caused by a poor lineup of releases for the quarter. Pre-owned software and hardware sales were down by 20.3 percent to $395.3 million, which was opposite to the trend set by some other retailers for the same period.
Gamestop’s collectibles segment was the only one to experience growth for the quarter, increasing by 10.5 percent year-on-year to $157.3 million. Accessories saw growth of less than 1 percent thanks to strong controller sales for the quarter.
Gamestop also reported that they were eliminating the quarterly dividends that they had been handing out to shareholders with immediate effect. The dividend per common share for the previous quarter was $0.38, a big drop for a year that saw a cap of $1.52 per common share. This elimination is expected to save the company $157 million annually.
At the time of writing the share price for Gamestop was at $6.90, a drop of 12 percent.