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GameStop hardware sales tumble after Neo, Scorpio announcements

The video game retailer's hardware sales took a rough hit after this year's E3 announcements about the future of Xbox and PlayStation.

GameStop’s Q2 earnings report came out today, which projected a relatively weaker quarter for the video game retailer compared to this quarter last year.

In an earnings report, the company is reporting a 6.2% drop in total sales from last year (Non-GAAP numbers) from $1.9 billion to $1.8 billion, and a major drop in console sales of 33.4%, going from $324.9 million from Q2 2015 to $216.4 million this year. 

On an earnings call the video game retailer partly attributed the drop in console sales to the announcements of the Xbox Scorpio and Playstation Neo around E3 this year, operating on the theory that news of imminent, more powerful consoles has deterred customers from buying currently available consoles. 

Game sales also dropped 18.2% from $467.2 million to $382.2 million. GameStop partly attributed this to a stronger slate of games for the quarter last year, going up against last year’s Batman: Arkham Knight and Elder Scrolls Online.

However, some of this quarter’s major releases included Doom, Uncharted 4: A Thief’s End, and the 800-lb gorilla Overwatch, which notably has already shot to 10 million players across PC and console. GameStop had previously deferred Overwatch’s sales from the last quarter while praising its progress, so it’s something of a head-scratcher to see it downplay the game's contributions this quarter. 

GameStop’s total profits rose to $617.7 million from $580.5 million from this quarter last year, so it’s not all bad news for the retailer. It continues to tout its expanded toy sales and mobile business as strong points for the company. 
 
That said, company’s shares did fall 7.74% in after-hours trading today as a result of the weaker quarter. 

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