GameStop Corp. (NYSE: GME) has started to look like one of those brick-and-mortar companies that disappear from time to time. In its case, the process is a slow one. While its net loss fell from $159.7 million a year ago to $50.5 million, its revenue dropped from $1.38 billion to $1.24 billion. GameStop has to arrest that decline and do so soon. (These are America’s 25 dying industries.)
The headline news was that GameStop fired CEO Matthew Furlong, but he had not done a good job. Among the most essential things old-line retailer management can do is keep the topline growing. There are too many examples where this has not happened. Almost none ended well. Board Chair Ryan Cohan has become executive chair. However, there is no evidence that he can solve the problem either.
Most major products GameStop sells can be bought online from other vendors. Amazon, which has blitzed the retail industry for decades, is probably the best example.
After a post-earnings sell-off, GameStop’s stock is off by almost 40% in the past year. There is no reason to think it will recover. Even troubled retailer Best Buy has done better.
Wall Street’s assumption is that GameStop’s best days are behind it. That is probably true. Cohan has to come up with a solution and come up with it soon.
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