Video game retailer GameStop's shares hit 15-year low after sales warning
GameStop shares plunged to fresh lows in trading Wednesday after the embattled video game retailer posted weak quarterly results and warned of weak sales projections in 2019.
While the Texas-based based company reported a surprise comparable sales gain in the fourth quarter, its adjusted earnings and revenue fell short of Wall Street’s expectations. GameStop noted significant sales declines for new hardware, new software and pre-owned gear.
The tough quarterly report sent GameStop shares below $9 for the first time since 2004 in early trading, though the stock pared some of its losses.
“As we think about 2019 and beyond, 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 CFO Rob Lloyd said in a statement. “Importantly, we will continue to leverage our powerful brand to drive growth and, with a new cost savings and profit improvement initiative in place, we will focus our efforts on driving profitability.”
For full fiscal year 2018, GameStop reported a global sales decline of 3% and a net income loss of $673 million. The retailer doesn’t expect much improvement in 2019, projecting a same-store sales decline of between 5% and 10% and declining to provide full-year sales guidance.
GameStop has struggled to maintain sales as the video game industry has gravitated toward digital game downloads and transactions rather than physical copies. The company abandoned plans to sell itself earlier this year.
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Google recently announced plans to launch a video game streaming service in 2019, creating more competition for GameStop. Apple and Microsoft are also said to be exploring an entry into the field.