2018, the shoe retailer acquired the Camuto Group for $375 million. As companies increasingly cut out middlemen and adopt direct-to-consumer models, GameStop needs its own portfolio of brands.Ĭompany-owned brands is a strategy Designer Brands has pursued. It sells video games and consoles, but it doesn't own or manufacture them. Private-label brandsĪnother liability for GameStop is its reliance on products from other companies. It's too early to know if GameStop can successfully create these spaces to attract customers, but it's the right move. While the company is mum on details, it wants to turn its stores into places for gamers to come together - perhaps in an e-sports tournament setting. GameStop needs to do the same and is experimenting with this in Tulsa, Okla. Dick's is giving its physical locations a reason to exist. Over the last 12 months, Dick's has added these HitTrax batting cages to 170 stores. While it's perhaps not the sole reason, I don't think it's a coincidence that the company's comparable sales are up 6% over that time. When it discontinued gun sales, it replaced those sections with things like batting cages - real-life experiences that websites can't offer. To turn things around, GameStop will have to leverage its 5,600 stores somehow.ĭick's Sporting Goods is doing this. However, simply shuttering stores won't save the company. In the age of e-commerce and direct-to-consumer sales, being just a brick-and-mortar middleman is a bad business model. GameStop's physical footprint is enormous with over 5,600 locations. So, what are two things GameStop can actually do to save its business? Location destinations Only this time, a console hardware update might not actually happen. While it's true that new console launches next year could boost GameStop's sales, the cyclical nature of console sales would eventually reach another down cycle. While its debut was marred by latency issues, this is the first step toward a console-less future. Alphabet's Google has launched a cloud-gaming service called Stadia. At the very least, it's easy to envision many gamers migrating to cloud gaming if given the opportunity. Video game company Ubisoft made headlines last year when its CEO Yves Guillemot shared his belief that the next round of physical hardware consoles will be the last. This is a console issue." However, investors should ask if physical game consoles will even exist in the future. Sherman said during the earnings call, "This is not uniquely a GameStop issue. Regarding GameStop's poor results, CEO George E. Microsoft's Xbox and Sony's Playstation haven't seen major updates since 2013, but both promise to launch new systems next year. The Nintendo Switch, released in 2017, is the newest system out there. The fiscal third quarter's poor results were exacerbated by the lack of new video game consoles.
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