Game Over For GameStop Sale

Continues to explore “strategic alternatives”
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GameStop

GameStop has called it quits on its eight-month-long search for a buyer.

The No. 1 gaming retailer had been shopping the company around since June as part of a broader strategic reassessment of the business.

The revaluation followed a series of executive suite shuffles last year — and the broader challenges of Cloud and mobile gaming, and developer-direct downloads — that are eating into the specialty chain’s sales.

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Earlier today, the retailer announced it has “terminated efforts to pursue a sale of the company,” blaming a lack of favorable financing terms that would be commercially acceptable to a prospective buyer. It said it had held discussions with several third parties.

Instead, GameStop will consider how best to use the $735 million in cash it received in the Jan. 16 sale of its Spring Mobile business, comprised of 1,284 AT&T mobile stores, to Prime Communications, another authorized AT&T retailer. Spring Mobile, along with its Cricket prepaid mobile chain, Simply Mac Apple reseller stores and ThinkGeek collectibles shops, were part of a diversification effort under former CEO Paul Raines, who died in March.

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The company said it may use the Spring Mobile proceeds to pay down debt, buy back stock and/or reinvest in its video game and collectibles businesses, while continuing its search for a permanent CEO. GameStop has been led on an interim basis since May by Shane Kim, a board director and former Microsoft corporate VP.

The company and its outside consultants are also continuing a “comprehensive review” of all strategic and financial alternatives.

The chain recently reported a 5 percent decline in total worldwide holiday sales, to $2.6 billion, for the nine weeks ended Jan. 5. Comp-store sales rose 3.6 percent in the U.S., albeit due to a fiscal calendar shift and the October launch of “Call of Duty: Black Ops 4.”

Broken out companywide by category, sales of new gaming hardware slipped 6.1 percent; sales of new gaming software declined 8.3 percent; and sales of pre-owned hardware and software fell 16.4 percent.

Conversely, sales of video game accessories, largely controllers and headsets, grew 28.7 percent, and collectibles sales rose 3.7 percent to $219.2 million.

Sales at GameStop’s mobile and Apple stores sank 19.3 percent during the period due to a decrease in store count and traffic, the company said.

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