International games retail giant GameStop has reported a decline in physical sales but a boost in digital for the quarter ending October 27th.
Net losses for the period reached $624.3m compared to net earnings of $53.9m the year before, but this includes goodwill and other impairment charges of $678.8m stemming from an impairment test that “was required under ASC 350 of generally accepted accounting principles due to a temporary decline in the company’s stock price during the second quarter”.
Like-for-like sales fell 8.3 per cent year-on-year with total global sales falling 8.9 per cent to $1.77bn. New software, pre-owned software and new hardware all fell steeply.
It’s a different story when it comes to digital, however, with sales rocketing 31.8 per cent year-on-year to $127m. Sales of tablets and pre-owned mobile phones hit $43.2m and remain in track to hit GameStop’s annual sales forecast of $150m-$200m for the bracket.
Adjusted net earnings for the period were $47.2m, down from $53.9m.
“Diligent operational efforts in a tough video game market as well as continued margin expansion of 200 basis points resulted in third quarter earnings exceeding expectations,” CEO Paul Raines stated.
“We are now focused on delivering a successful holiday quarter driven by great titles, an unrivalled loyalty program, exciting new businesses and the Wii U launch.”
CFO Rob Lloyd added: “During the quarter, we reached an important milestone of repurchasing $1 billion of our stock since 2009. Our on-going buyback program and quarterly dividends highlight our commitment to improving total shareholder return through disciplined capital allocation.”