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Analyst: GameStop Lost Holiday Traffic To Big-Box Discounters Like Wal-Mart

Janco Partners analyst Mike Hickey says that GameStop stores likely lost traffic during the holidays due to big box retailers like Wal-Mart offering highly discounted prices on its consumer produces. Hickey also forecasts that GameStop's holiday sales are
Janco Partners analyst Mike Hickey says that GameStop stores likely lost traffic during the holidays to big box retailers like Wal-Mart. Hickey suggests that highly discounted pricing on consumer products attracted shoppers away from the video game retail chain, speculating, "We think low price retailers like Wal-Mart, arguably the largest domestic video game retailer, likely took market share this holiday." Take-Two Board chairman Strauss Zelnick also recently said he believed that foot traffic was down at game stores during the months leading up to Christmas. "I can’t say that, because I can’t actually quantify it," GameStop CEO Dan DeMatteo said at the time. "But... October was strong, and [in] the first two weeks of November, our comps [year over year comparisons] are up 20 percent -- so that implies there's foot traffic... so, at least the new titles are bringing out the buyers." DeMatteo added that GameStop has an advantage as a specialty retailer, and so any evolutions in how it handles game inventory is lessened, compared to a big-box outfit where games are just a section. Hickey forecasts that despite reduced holiday traffic and economic malaise, GameStop will report in its January 6 sales results announcement that holiday sales performance met its recently-reduced fiscal Q4 2008 guidance.

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