Gamestop's Financial Woes

[digitalpress]

News from Gaime Daily:

GameStop Joins Doom and Gloomers [12/18/2002 4:46:35 PM ET]

Continuing the downbeat tone of the day, retailer GameStop Corp. issued revised earnings expectations for its ongoing fourth quarter.
The company now expects comparable store sales to be between –4 percent and –6 percent in the quarter, with earnings per share in the $0.48 to $0.52 range. Earlier forecasts had called for an 8 to 12 percent gain in comparable store sales and EPS of between $0.62 and $0.68.
Full fiscal year earnings per share should still meet guidance from earlier in the year, in the range of $0.83 to $0.87.
Despite the gloomier Christmas, GameStop is still projecting full year total sales growth of 20 to 22 percent, comparable store sales for the year between 12 and 14 percent and EPS growth of approximately 90 percent year-over-year.
The company blamed a shorter shopping season this year (six days less by their count), a weak economy and the lofty goal of having to exceed year-ago comparable store sales of 59 percent, as reasons for the revision.

[dsullo]

yesterday was a tough day on the market for alot of companies

[kainemaxwell]

How's the shopping season 6 days shorter anyhow? Yeah, someone I know who works at my local Babagges was saying that they should have been making alot more money with all the people in the mall at the time too...

[punkoffgirl]

How's the shopping season 6 days shorter anyhow? Yeah, someone I know who works at my local Babagges was saying that they should have been making alot more money with all the people in the mall at the time too...

My guess is they base it on Thanksgiving, and it probably came 6 days earlier last year.

[digitalpress]

How's the shopping season 6 days shorter anyhow? Yeah, someone I know who works at my local Babagges was saying that they should have been making alot more money with all the people in the mall at the time too...

The shopping season is shorter because the fourth Thursday of November (Thanksgiving) fell right at the end of the month. There's usually a little more time in November after Black Friday but this year it was Friday-and-out. This is why Xmas may have seemed to creep up faster this year than usual!

[kainemaxwell]

Ah yes that's right. The TRU Bib Book Sale ended a week before Thanksgiving this yr becaus eof the hsortened season (it usually ends right before Thanksgiving and the Black Friday Doorbusters start the Friday after Thanksgiving).

[toddst]

I'm not surprised...look at their prices. Their new games are usually more expensive than Bestbuy and large online retailers, and many of their used games are only a few dollars cheaper than the new games (and in some cases way more expensive than new games at other retailers).

Also, at least in Boston, their location sucks...

-Todd (Cheap Bastard)

http://www.foodtastesgood.com

[Captain Wrong]

I'm not surprised...look at their prices. Their new games are usually more expensive than Bestbuy and large online retailers, and many of their used games are only a few dollars cheaper than the new games (and in some cases way more expensive than new games at other retailers).

Very good point, this. Their prices are pretty out of line for new stuff. I've always had a feeling the used games was where they really made their money, though. I'm sure cost of the games to the store is much lower buying back used games than buying wholesale new.

But I've noticed their used prices inching up as well. Why would someone in their right might buy a scratched up and game doctored, missing instructions game from them just to save $5 or less!

Assuming used games are their bread winner, they might want to be more selective about what they take in and be prepared to get a little less margin on that stuff. What do I know though?

[Arcade Antics]

Their prices are pretty out of line for new stuff. I've always had a feeling the used games was where they really made their money, though. I'm sure cost of the games to the store is much lower buying back used games than buying wholesale new.

Indeed. I've seen many a salesperson coax people into buying a used copy of a game they asked for new, even though the used copy was only $5 cheaper.

Gimme the new copy any day of the week. But make sure it's from a different store that sells their games at MSRP or LOWER, not 10-15% MORE. :-D

[Oobgarm]

I really and truly love working with the one hobby of mine that I've been pursuing for nearly 20 years, and I wouldn't stop doing it for any reason. I pride myself on being honest and friendly, just as I expect to be treated when I'm shopping for games. It's a shame that most of us get a bad rap due to a couple of holier-than-thou employees.

So, being a Gamestop employee myself, I also see the things that you all have mentioned. I've been with the company for about 5 or so years now, back when our store was Funcoland. I hold longingly to the past and weep for the future.

Back in the old Funco days, disc-based games were always required to be traded in complete with their case/instructions. At least that was the way it was at my store. I agree: "Why would someone in their right might buy a scratched up and game doctored, missing instructions game from them just to save $5 or less!" If only the game was in comparable condition and had all of it's docmentation would it be worth getting at the used price.

However, I've noticed a disturbing trend since the switchover to Gamestop. If a title is taken in and it is too scratched to resell, it's sent back to be resurfaced. However, when the games are shipped out to the stores, many of them lack cases and instructions. The company says "All the customer wants is the game. They don't care about the instructions or case." That has to be the biggest load of BS I've ever heard. What gamer doesn't want their game to be complete? It renders that $5 "used" discount moot.

Just recently, our store received 7 copies of GTA3, a GTA Vice City, and a copy Madden 2003 to sell as used. Not one of them had cases or instructions. Absolutely ridiculous. And we're told to pitch the used product first. Even with the 10% discount card, I'd still rather throw out the extra money to get a complete copy (and new, to boot).

The shameless pimping of reservations is also bad. "Halo 2 will be the HOTTEST title of 2003. We don't even know the release date yet but speak, simle, and ask every customer every time to reserve Halo 2." You can only ask a person to reserve a game so many times before they totally tune you out, or even avoid doing business with you. I understand that reserves are a great way to increase traffic, but badgering customers is not a good business practice. I think this old Penny Arcade pretty much sums up the way we are "programmed" to pitch reserves:

http://www.penny-arcade.com/view.php3?date=1999-04-09&res=l

It's always like this: "Okay, we think game X is going to sell tons of copies. Let's pimp game X so everyone thinks they have to buy it, and then we'll forget all about it as soon as it's in stores and move on to some other game." State of Emergency, anyone?

Sorry, had to vent there.

Really, though, I'm surprised to hear that the company is not pulling in the $$ like they thought. Most of the stores I know of are having amazing holiday seasons. Of course, the market could be oversaturated, but that's a different post for a different time...

[Nature Boy]

I *refuse* to buy a used game if it's only $5 - $10 cheaper. What's the point? I'll wait until it's a year old.

I'd be pretty confident that they make more money per game on used than on new. Retailers don't have huge margins on new games - it's the manufactures that make all the money (or so I've been led to believe after seeing what my friend at the hobby store had to pay for games if he wanted to sell them new).

[swvcc]

I quit shopping at Gamestop because the used games are DISC ONLY! I will only buy a used game if it is complete.

I was buying a Playstation game at a Gamestop (it had the instructions and back insert) and when I took it to the counter they told me I COULDN'T HAVE THE INSTRUCTIONS or the back insert!! She said "you don't need the instructions...you just get the CD". They lost me as a customer forever.

[bargora]

If Gamestop/Funcoland/Babbage's/Software Etc. makes all used game sales "bare" only, then they can go down like the Hindenburg for all I care. As it is, I only consider purchasing a used game there if I see a complete box on display, and I have usually been correct in expecting to receive a complete game when that's the case. If not, I just decide not to buy it.

[vincewy]

I quit shopping at Gamestop altogether since those bastards were selling used game, reshrink-wrapped and advertised as new. Remember their return policies?

[Lady Jaye]

Hell, if we wanted to buy games without their original cases or instructions, we'd buy all our used games at Blockbuster. Seriously, tho, I was burned when I bought Tony Hawk 4 (PS2) there last spring.

I now either buy my used games at Electronics Boutique or Game Zone (a local videogame rental store). Not only have I had perfect or near-perfect complete copies of games there (only a few I've seen at EB lack the instructions, and these copies are clearly identified), but their buy-back credit prices are good too (compared to Microplay, anyway...). For example, I decided to sell my review copy of Mortal Kombat Advance. Everyone agrees that it's a pretty bad game, right? Well, I called EB, Microplay and Game Zone. Both EB and Game Zone were giving me $20 Cdn in credit (not bad for a game with such an ill reputation), while the guy at Microplay almost laughed at me and offered me $5 in CREDIT for it. Considering that I'd reinvest that credit into another game that I'd actually want, what's the point of getting $5 Cdn off? It just isn't worth it.

Anyway, I can't comment about Gamestop and its affiliated chains, since they don't have stores in Canada. But the contrast between your experiences with them and with what I've seen at Electronics Boutique is quite sharp. My only beef with EB is that there's usually a lot of clients in the store, so getting hold of a clerk is not that easy to do.

[kevincure]

Gamestop is the single worst videogame store I've ever been too, though at least they're affiliated with Funcoland, which is always fun to stop by. Here's why (from my Boston perspective):

Price are ridiculous. Who charges 55 for a new game when I can usually get it at Best Buy for 40? They still haven't lowered prices on DC titles here - that 30 dollar used copy of D2 is gonna be sitting around for a while I thikn.

They ripoff the poor - The Funcoland in Fields Corner, a poor neighborhood (and my birthplace, word!), charges 10-20% more for DC/PSX games than the Gamestop in the posh Prudential Center. Proposterous.

Used games aren't in good condition - as has been mentioned. The guys at the EBX here in Boston are wicked nice - they always let me know when new DC stuff is in and will even give you a new case free if the old one is cracked.

However, nothing compares with my town back in Oregon (where I'm headed to in a couple days over break). There are *4* different independent videogame stores (at least) in my town of 150,000 (as compared to *ZERO* in Boston - there's a helluva lot of money to be made, no doubt). Here's what I have:

Big City Gamin' - 4 53" HDTV's with Xbox, GC and PS2 hooked up at all times for like 5 bucks a person an hour. Linked for 16p Halo too. All games are rental for a dollar a day, as many days as you want it. After a month, they go for sale for 39- (many of them only rented a couple times and in much better condition than what you get at EB/GS). Tons of used games, great buys, and they still make money.

CD Exchange - big used section, they know jack about pricing, so you can score good games from NES to Xbox for cheap often.

Video Games Plus - the prices were sorta wac, but occasionally you'd find a good deal. Got my Saturn w/ 6 games a year ago for 50 bucks.

Game Grotto - way overpriced, ebay pricing, but they have a lot of expensive games for rent, such as Super Puzzle Fighter.

Other game store in the mall - Not sure the name, but it had just opened up when I came to college.

Plus the 2 goodwills which usually have something. And a Game Crazy, which has decent prices. And a Software Etc. Plus the chain stores.

It's wierd that I came to one of the biggest metro areas in the country, and the videogame selection isn't even close to what I had in my 200,000 metro area sized town in Oregon.

[Six Switch]

Well I have no prob with GameStop pulling the plug.Their games are all the same,61967841968 Mario/Duck Hunts,and they all cost way toooo much.Flea markets and EB are the better places to go. :-D 8-) -_-

[Zaxxon]

YAY!!! DIE FUNCOLAND DIE!!! :D

[scooterb23]

Sadly, Gamestop / Funco has all but become a dead entity in my mind...I go in maybe one every two to three months...

The merging with Software Etc. and other locations killed the unique features of Funco...like the monthly pricing newspapers...I would keep two or three of those at a time, to chart progress of the prices of games I wanted...

I think selling new games also hurt Funco a lot...it offended me the first time I walked into a Funcoland and saw a new release section...I went to EB for new games, Funco for used...that was my rule...

And now in my local area of Columbus, Ohio they are choking the city with stores!!! 6 of them in Columbus area!!! there are 2 stores within 1 mile of each other on the East side of town, and 2 on the same road on the North side!!!

Of course, to be fair, EB has an even higher proliferation rate, they are now opening their 7th store in Columbus (they actully have 2 stores in the same mall! One right above of the other!!!)

Sorry for the pointless rambling, this is becoming a sore spot for me though...while I like having a lot of options...they all sell the exact same crap for the exact same prices!!!! It just seems excessive...

[kainemaxwell]

The one thing about Gamestop's credit system I do like over EBs is the fact that you get a receit for your credit you can use anytime later long as you have it. EB you get the credit and you gotta use it that day. I prefer Gamestop's since you can get your credit, then come back a week or month later and get what you want if/when they have it, or when it's released that way totally on credit, or partially on credit and cash.

And why are NES games so overpriced and why are N64 display sin cd jewel cases?!

And I really miss the Funco days with the price lists..now they give crap there...

[Chunky]

I was buying a Playstation game at a Gamestop (it had the instructions and back insert) and when I took it to the counter they told me I COULDN'T HAVE THE INSTRUCTIONS or the back insert!! She said "you don't need the instructions...you just get the CD". They lost me as a customer forever.

They did that to me Monday. I picked up Mr.Domino. i had the case in my hand handed it over, it had instructions and insert.....i didn't look they put it in the bag behind the counter. i get home and it's just the game in a cd case. I was soo pissed.

(another GS store)And the other time i went and picked up 10 NES games and they took about 3 out, didn't charge me and put them in a bag. i get to the car look at the games and WTF where are the other 3. I go back in and he tells me we can't sell those sorry. No other reason, I asked...what are they marked wrong, or do you guys personally need them... Comon tell me. he just said Sorry.

Yet another store i was just in(i run into alot of them since i drive around all day and hey if i spot one i stop in) I asked if where are the NES/SNES games. The girl laughed and said that they never move any of those so they stoped taking them in or selling them. I asked has anyone ever come in with some odd stuff like a Neo-Geo. "Whats a Neo-Geo?" i explained a little. "Why would you or anyone Own one of those?" and laughed and laughed. I was about to rip that nose to ear ring OUT!

[Captain Wrong]

Rule number one when buying a used CD game at Funco/EB/Babbages, etc:

ALWAYS check the game out before you leave the store. Make sure the clerk sees you inspecting the game so they can't accuse you of switching the games.

I'm to the point know where as they are ringing me up I'll ask to see the disc and sepcifically ask "I'm am getting instructions and all the packaging with this, right?" This way there is no confusion on my part or theirs as to what I have just paid for.

[MarkM2112]

Rule number one when buying a used CD game at Funco/EB/Babbages, etc:

ALWAYS check the game out before you leave the store. Make sure the clerk sees you inspecting the game so they can't accuse you of switching the games.

I'm to the point know where as they are ringing me up I'll ask to see the disc and sepcifically ask "I'm am getting instructions and all the packaging with this, right?" This way there is no confusion on my part or theirs as to what I have just paid for.

I ALWAYS check the discs.... I have found too many games that seem to have been used as coasters or something in a previous life... :-)
Also, I have NEVER had a problem with GameStop selling me complete games if they have them... In fact, sometimes they make a special effort to find them if they only have a title card on display... Must be only a location thing...

[batmanlivesatmyhouse]

Yeah, I've noticed the steady increase in prices (especially the used games! Why buy Devil May Cry used for 20, when you can get it new for the same price at Target?!), and that the quality of used games is now garbage (they don't even check the used games they buy anymore! I've had to return used games more than once, and now, I have finally learned my lesson). I still have the discount card on the remote possiblity that I will, someday, find a good deal that would make the purchase of my card worthwhile. It's sorta like I'm just paying for the subscription to Game Informer, whose reviewers are biased and complete jerks.

I will never set foot into a Funcoland ever again. Every single one I've went in to (this is in the Tri-State area, mostly on Long Island), the clerks are complete @$$holes. Complete and utter. They treat their customers like $hit (sorry for the profanity, but Funcoland just pisses me off), and talk down to everyone as if every shopper is an idiot. Die, Funcoland, Die! >:(

[kainemaxwell]

Why must the great stores that cater to collector slike us eventually go down the road to ruin...