[3/24/17] Videogame chain GameStop Corp., hit hard by a shift to digital downloads, plans to close at least 150 stores this year and expand nongaming businesses.
Sales and earnings fell by double digits in the latest period, and the GameStop brand lost some market share during the holiday season due to discounts, Chief Executive J. Paul Raines said Thursday on a conference call.
Publishers, Mr. Raines said, started cutting prices earlier than expected, “leading to a steep decline in retail pricing.”
The retailer is betting on the latest generation of gaming consoles like Nintendo Co.’s Switch, which went on sale globally this month and in which GameStop sees the potential to generate the kind of sales that Nintendo’s popular Wii system did.
“The Switch has provided a dramatic lift in traffic in stores and has real potential to be Wii-like in its ability to expand the gaming category from core to broad audiences,” Mr. Raines said, referring to a Wall Street Journal article that Nintendo could double production of the console.
At the same time, the Texas company continues to expand beyond videogame sales.
In 2008 GameStop relied entirely on store sales, Mr. Raines said. In the year that ended in January, its business other than physical videogame sales accounted for 36.9% of adjusted operating earnings, up from 24.5% a year earlier, driving profit and gross margin expansion, he said.
