Weak Sales Trigger Closings
In my last stream-of-consciousness article, I talked about the digital distribution of video games and how the sales of physical media would eventually suffer. My mistake was in using the word “eventually”. Evidently, GameStop is feeling the proliferation of digital distribution of console games straight in the wallet.
GameStop has experienced a pretty brutal fiscal year. After reporting a decrease of 2.8 percent year-over-year for 2016, the video game retailer decided to retool its strategy. That retooling is complete, and the verdict is a nasty one. GameStop expects to close 2-3% of its stores worldwide. GameStop has 7,500 stores worldwide, so the closings can affect up to 225 stores total.
GameStop’s stocks fell 31% following reports where they stated their 4Q16 numbers were 13.6% lower than the same quarter the year before. The losses were in sales of new consoles and games. Like other retailers, GameStop sought to aggressively promote Thanksgiving and Black Friday sales. However, the relatively weak Christmas season resulted in fewer sales than expected.
Honestly, GameStop is not the only retailer that felt the pinch. Sales of digital copies of games outnumbered physical sales for the third year in a row. With the low number of games purchased physically nowadays, GameStop was primed for a loss.
The good news for the retailer is that there was growth outside of its core business. The sale of collectibles via affiliate brands like ThinkGeek rose 27.8%. That has prompted the company to plan the opening of 35 new collectible stores. The increase in sales also includes the AT&T affiliate Spring Mobile, a company GameStop offers in its stores. The success of that branch has led to the proposed opening of 65 new technology stores.
Personally, although I am not a fan of GameStop in general, the store I have within walking distance of my house is a store I enjoy going to. The staff are extremely friendly and not pushy in the least. Unfortunately, they are also a small store and a possible candidate for closure. Hopefully, the spot will be able to duck the corporate axe and stay open. I’m an old man and can’t walk the 10 miles to the next nearest video game retailer.
