Shares in GameStop plummeted by 16% in extended trading after the company announced its fourth-quarter earnings. Revenue was $1.79 billion, down from last year’s $2.23 billion during the same period.
Expenses fell by 21.2% to $357.1 million, largely resulting from lower labor costs as well as consulting services and marketing. Reduced labor costs were largely the result of GameStop’s exit from its operations in Austria, Ireland, and Switzerland.
Still, GameStop’s reduced expenses did little to quell worries about its declining revenue, particularly given the rising trends in video game purchases. “An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately,” Wedbush Securities analyst Michael Pachter observed, Pachter recommended that GameStop management think of new ways to drive store traffic.