Down $673 million in 2018
GameStop had its worst year ever by a large margin. The video game retail giant is trending down in almost every area of operation, prompting its brass to concede that it needs to change its business model.
For the 2018 fiscal year, GameStop has posted net losses of $673 million. Net sales were down three percent to $8.29 billion. New hardware sales dropped one percent ($1.77 billion), new software is down five percent ($2.45 billion), and pre-owned game sales are plummeted more than 13 percent ($1.87 billion). The collectibles sector is the only one that showed growth, up 11 percent ($707.5 million).
The numbers show that 2018 was historically unkind to GameStop. Prior to 2018, GameStop’s worst fiscal year was in 2012 when it reported net losses of $269.7 million. The only other unprofitable year in GameStop’s history was 2000 — when the company was much smaller and lost $7 million.
GameStop has been in dire straits for a while, as the rise of digital distribution cannibalized its pre-owned sales model. The ever-shrinking used games market is alarming for GameStop, who hitched its wagon to this trend many years ago. COO and CFO Rob Lloyd told investors “We recognize the challenges facing our pre-owned video game business and are prepared to address them as we continue to evolve our business model going forward.”
GameStop is going to have to figure out something fast. A while back, its board planned to sell the company but those plans have been scrapped; the announcement that GameStop wasn’t for sale caused the company’s stock price to crash to a 14-year low in January. Furthermore, forecasts expect total sales to drop another five to ten percent in 2019.
On the bright side, GameStop says it has a plan to optimize logistics and operational strategies that could wind up saving the company upward of $100 million annually. However, that’s not expected to make much of a dent until 2020 at the earliest. Change (and profits) need to come quick though, because it very much seems as though time isn’t on GameStop’s side.
GameStop posts $673 million full-year loss [GamesIndustry.biz]