The slumping market of video games hit GameStop with a big blow this last holiday season that resulted in a loss of double digits in sales and a difficult decision taken by the largest retailer of video games in the U.S. to close from 150 to 225 stores.
Shares of GameStop fell over 13% in Friday, after it posted its earnings report that showed sales had fallen close to 14% during its fourth quarter to end the three-month period at $3.05 billion.
The company said its losses were due to disappointing sales of specific marquee titles and the steep discounting placed on consoles by rival retailers during the shopping period of Black Friday. The increase in digital gaming played a role as well.
In all, the sales of video games at GameStop were down 10% while sales of consoles dropped by 29%.
The retailer is hoping the release of Nintendo Switch earlier in March will help to turn things in a better direction. During its earnings call, company executives said the demand for Switch is strong with units selling out hours after arriving at stores.
CEO at GameStop Paul Raines said that Switch provided a huge lift in the amount of traffic at our stores and has true potential to reach star-like popularity like the Wii in its ability to grow the gaming category from just core players to a broad range of audiences.
While the core business of the company has been struggling, it did post growth for its properties that were non-video game related. This year, GameStop is planning to open 35 Collectible stores along with 65 Technology Brand locations that include Sprint, Mobile Simply Mac, Cricket and AT&T.
GameStop, during his conference call, its posting of its quarterly earnings or any time after, did not specific any of the locations that were going to be shuttered or what the dates are for closing them.
The planned closing amounts to between 2% and 3% of the global footprint of GameStop’s more than 7,500 stores.
The video game industry has been hit hard of late due to how much mobile handset users are streaming video on their smartphones, tablets and other mobile electronic devices.
This makes it hard for companies to sell hardware such as consoles a large percentage of the population.