GameStop shares tumbled 9 percent on Friday, after the video game and electronics retailer said sales in its established stores plunged 18.7 percent in November and December.

Plagued by heavy promotions, soft store traffic, and double-digit sales declines in hardware and video games, the chain's overall sales fell 16.4 percent to $2.5 billion.

Though trends improved in December, it was not enough to offset a 26.6 percent comparable-sales slide in November. That month's results were "significantly impacted" by weak sales of "Call of Duty: Infinite Warfare" and "Titanfall 2," as well as "aggressive console promotions" on Thanksgiving and Black Friday.

Shares were trading at $22.51 in late morning.

"We are disappointed with our overall results, but looking broadly, we did see continued growth in our non-physical gaming businesses," CEO Paul Raines said in a statement. "We expect this category to approach 40 percent of our earnings in fiscal 2016."



Indeed, as video game sales turn more digital, GameStop has been closing underperforming stores and diversifying its business model. That includes placing a bigger emphasis on collectible items and technology like Apple's iPhone. Both of those segments posted double-digit gains in the holiday period.

"Long term, GameStop's diversification strategy is critically important," Robert W. Baird analyst Colin Sebastian told investors.

Following its weak holiday performance, GameStop lowered its fourth-quarter and full-year comparable sales projections. The company now expects same-store sales to decline between 16 percent and 18 percent in the fourth quarter, compared with its prior prediction of a 7 percent to 12 percent drop.

For the year, GameStop expects same-store sales to decline between 10 percent and 12 percent. That compares with the previous projection for a 6.5 percent to 9.5 percent decrease.

However, the company reiterated its expectations for fourth-quarter and full-year 2016 earnings per share, due to a favorable tax rate. GameStop expects to earn between $2.23 and $2.38 a share in the fourth quarter, and $3.65 to $3.80 a share for the fiscal year.