GameStop’s full-year guidance has been lowered yet again following the nine-week holiday sales period. It’s been reported that sales for the period were well below expectations, providing yet another heavy blow to the company.
Holiday sales for GameStop have been reported at $1.83 billion, which is down by 27.5 percent year-on-year from 2018. In 2018 GameStop actually reported an 11 percent increase in holiday sales, though a boost from the launch of the Xbox One X and growing Nintendo Switch sales were mostly to thank. With the end of the current console generation fast approaching, GameStop will definitely not have benefitted from a similar sales boost in 2019.
GameStop explained in a statement that sales were in line with a trend that the entire industry is currently experiencing. The added that the drop in sales is mostly due to a lack of hardware sales because of the approaching next generation of consoles.
Due to the lower than expected holiday sales, GameStop has once again altered its full-year guidance. In their Q3 sales report last year the company altered their full-year guidance from a 5-10 percent decline to a decline in the high teens year-on-year. GameStop has now provided a more specific decline year-on-year between 19 and 21 percent expected for the current quarter.
GameStop described that their expectations were for the difficulties and challenges they’ve been facing to continue into 2020 and the final quarter of the current fiscal year. However, they also believe that their current strategy to optimise long-term income, profitability, and revenue streams will serve them well leading up the holiday 2020, when brand new revenue streams will come about.
GameStop CEO George Sherman explained that the company’s optimisation strategy will be implemented throughout 2020 in preparation for the next generation of consoles.
The company faces a long year ahead if they don’t diversify quickly as other games retailers have. Plans are in place to create a set of niche stores that specialise in items such as retro games, and even esports arenas like the Belong Arenas of UK retailer GAME. With the promise of a sales boost from the Xbox Series X and PlayStation 5 in less than 12 months, the company just has to hold out until then, and then they’ll be in a far better position.