What happened
Shareholders of GameStop (GME +6.33%) lost ground to the market on Thursday as the stock fell 3% by 11 a.m. ET compared to a 0.4% drop in the wider S&P 500. The decline added to significant short-term losses for investors. GameStop's shares are down over 20% so far this year compared to an 8% drop for the market.
Thursday's decline came after a rival retailer announced its own holiday season results.
NYSE: GME
Key Data Points
So what
Best Buy (BBY 0.73%) said in a morning press release today that fourth-quarter sales trends were slightly worse than management had predicted in late November.
The consumer electronics industry was pinched by supply chain shortages, the rise of the omicron variant of COVID-19, and declining demand for products in the video game niche compared to a year earlier. Each of those challenges likely affected GameStop over the holiday selling period, too.
Image source: Getty Images.
Now what
GameStop will announce its fourth-quarter results sometime around March 23. Most investors have modest expectations heading into that announcement, with sales projected to rise about 4%. Earnings are forecast to fall, too, in part because of surging expenses in areas like wages and transportation. Best Buy reported declining profitability for its fourth quarter and said that trend might persist at least into the first half of 2022.
NYSE: BBY
Key Data Points
Best Buy forecast slight sales declines in each of the next two fiscal years before revenue begins setting records again following two years of big gains. There won't be a repeat of the unusual tailwinds that lifted the video game industry in 2021, after all, including federal stimulus payments and widespread social distancing efforts.
We'll learn in a few weeks whether GameStop sees these factors pushing its sales much lower in 2022. Wall Street is currently bracing for a roughly 1% revenue drop this year.
