Ambitious Plan
Related: GameStop Earnings Conference Call Transcript
Also, it needs to be seen to what extent the efforts to create social gaming hubs would help in addressing the daunting challenge of customers turning to online platforms to buy consoles and download games.
Digital Push
Meanwhile, the continuing digital push aimed at boosting omnichannel capabilities – in response to weak store footfall and competition from rivals in the e-commerce space – could be a game-changer for the company.
In addition to the falling customer traffic, the top-line will also be hurt by unfavorable currency exchange rates. A part of the impact could have been mitigated, had the company released more titles and rolled out promotional offers. The increased focus on products that yield higher margins and the steady performance of the collectibles business are the promising areas as far as sales are concerned.
Mounting Loss
In the second quarter, the company incurred a loss of $0.32 per share that also fell short of expectations, triggering a stock selloff. Reflecting the dismal comparable store performance, sales dropped 14% to $1.29 billion and missed the Street view.
Electronic Arts
Among others, Electronic Arts Inc. (EA) recently reported above-consensus earnings and revenues for the second quarter of 2020. Encouraged by the positive results, the company revealed plans to double down on live services. At $1.35 billion, revenues were up 5% year-over-year.
GameStop lost significant market cap in recent years as the stock dropped consistently and slipped to an all-time low earlier this month. The value dropped 59% since the beginning of the year and more than halved in the past twelve months.