GameStop’s (NYSE:GME) earnings report for the second quarter of 2019, which ended Aug. 3, showed nothing but bad news for the troubled retail chain, causing its stock to plummet 16.1% to $4.27 per share in after hours trading.
Comparable store sales dropped 11.6% for the quarter, with total global sales decreasing 13.1% accounting for inflation. The company lost $415.3 million this quarter compared to a loss of $24.9 million during the same period in 2018. Most of that decline is ascribed to asset impairment, but operating losses still rose to $32 million.
Those declines were spread across GameStop’s core business, with the company experiencing a 41.1% drop in hardware sales, 9.5% decline in accessory sales, 5.3% decline in new software sales, 17.5% drop in sales of pre-owned hardware and software, and an 11.2% decrease in digital purchases. Collectibles were the only category that improved, experiencing double-digit growth at both domestic and international stores.
In a press release, GameStop ascribed the declines to a weak software lineup during the period, that was only somewhat mitigated by new Nintendo Switch titles, along with consumers waiting to buy the next generation consoles in 2020.
“While we experienced sales declines across a number of our categories during the quarter, these trends are consistent with what we have historically observed towards the end of a hardware cycle,” GameStop’s chief financial officer Jim Bell said in the release. “We will continue to manage the underlying businesses to produce meaningful cash returns, while maintaining a strong balance sheet and investing responsibly in our strategic initiatives.”
The report also offered an update on the GameStop Reboot turnaround initiative, which led the company to lay off 14% of its staff last month. The retailer touted is Aug. 29 website relaunch as a way to better reach omnichannel shoppers and said it is working on improving its in-store experience and PowerUp Rewards loyalty program to position itself as a social and cultural gaming hub. GameStop will also continue finding ways to cut costs through store rationalization and optimizing its supply chain.
“We are committed to acting with a sense of urgency to address the areas of the business that are critical to achieving long-term success and value creation for all our stakeholders,” GameStop CEO George Sherman said in the release. “We will set GameStop on the correct strategic path and fully leverage our unique position and brand in the video game industry.”
The retailer predicts a comparable sales decline in the low teens for the full 2019 fiscal year.