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GameStop sales and profit fall, makes leadership changes

A drop in sales of video game hardware and software took a toll on GameStop’s first quarter results.

For the quarter ended May 5, GameStop’s net income fell to $28.2 million, or 28 cents per share, from $59 million, or 58 cents per share, for the same period a year ago. This drop included store closure charges, and other charges related to previously disclosed management changes, of $12.6 million.

The retailer’s total global sales decreased 5.5% to $1.93 billion (decreased 7.5% in constant currency), which resulted in a consolidated comparable store sales decrease of 5.3% (2.6% decrease in the U.S. and 11.6% decrease internationally). This is compared to analysts’ estimated 4.2% drop in same-store sales.

This decrease was due to a 7.9% drop in new hardware sales, and a 10.3% decrease in new software. Both of these categories were impacted by the highly successful launch of the Nintendo Switch in the first quarter of fiscal 2017.

GameStop also ended the quarter by naming board member Shane Kim as its interim CEO. Michael Mauler stepped down as CEO in May, after only three months on the job. Rob Lloyd has been promoted to chief operating officer and chief financial officer.

“As the board conducts its search to fill the position on a permanent basis, Shane will work closely with Rob…and Dan Kaufman, our executive VP, chief administrative and legal officer,” said Dan DeMatteo, the company’s executive chairman. “Together, Shane, Rob and Dan, along with the other members of our senior leadership team, will ensure the organization is focused on driving forward our business strategy and key priorities.”

Looking ahead, GameStop still expects earnings for fiscal 2018 to be substantially back half weighted for the fiscal year. Expectations are based on the overlap of the Nintendo Switch launch in the first half of the year and expected strength of the title line up in the second half of the year.
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