Today specialty retailer GameStop released their third quarter earnings. Though “earnings” might not have been a particularly accurate term in this case. The call led off with the revelation that revenue for Q3 2012 was sitting at $1.77 billion, a drop of 8.9% from the $1.95 billion in the same quarter last year. Sales on new software and hardware, as well as pre-owned software, have dipped, which GameStop attributes to an extended console cycle and last year’s impressive third quarter release schedule.
Most immediately shocking, though, is that the company is actually posting a loss for the quarter. Despite $47.2 million in net earnings (down from $53.9 million the year before), GameStop posted a loss of $624.3 million due to impairment and goodwill charges of $671.5 million. These impairment and goodwill charges were necessitated under generally accepted accounting principles due to an allegedly temporary dip in GameStop’s stock price during Q2 2012. They assert that this should not affect the company going forward.
It’s not all bad news, either. Digital sales are up, as are those through “new business channels,” which we can only assume entails GameStop’s tablet and phone business. Thus, despite what appears on the outside to be a rough quarter, the company does not appear to be going anywhere anytime soon.
Source: GameStop Q3 Earnings Report