Former Xbox boss Shane Kim named interim CEO at GameStop Q1 financials show predictable drop-off from Switch release but company maintains predictions for a stronger second half of 2018

Rebekah Valentine Senior Staff Writer Friday 1st June 2018 Share this article Share

Companies in this article GameStop

Former Microsoft exec Shane Kim has taken the helm at GameStop as interim CEO while the retailer continues its search for a permanent replacement.

Kim has been a member of the chain's board of directors since 2011, and brings extensive games industry experience to the role. He is perhaps best known to GamesIndustry.biz readers for his 19-year stint at Microsoft, where he held various positions including general manager of Microsoft Game Studios and corporate vice president for the firm's Interactive Entertainment Business.

He was instrumental in the rise of the original Xbox and its follow-up the Xbox 360, until he left the firm in 2010.

Kim is now the fourth CEO GameStop has had since November 2017, when the retailer's long-running chief J. Paul Raines left for medical reasons and has sadly passed away since. Executive chairman Dan DeMatteo took over on an interim basis, and was replaced (on a seemingly permanent basis) by 16-year veteran Mike Mauler in February.

However, Mauler left both the role and the company just three months later, citing personal reasons, putting DeMatteo in charge once again. The departure prompted investors to call for a 'strategic review' into GameStop's business.

In a statement, DeMatteo was confident Kim could keep the firm on track until a replacement is found, saying: "We are fortunate to have Shane assume the role of interim chief executive officer and welcome his insight as a video game industry veteran. Shane has been an actively engaged member of GameStop's board of directors since 2011 and will bring additional executive focus, energy and passion to the organization during this time of transition.

"With Shane's proven track record as a highly effective leader... we will position each of our businesses to optimize their operations and profitability over the long-term."

GameStop took the opportunity to announce another appointment, as Rob Lloyd is promoted to chief operating officer and chief financial officer.

The news emerged as GameStop published its financial results for the first quarter of fiscal year 2018 ending on May 5. The report showed a predictable decrease in net sales year-on-year due to the Nintendo Switch's release during Q1 2017.

GameStop's global net sales decreased 5.5% to $1.93 billion for the quarter, with a gross profit of $657 million. A large chunk of the sales drop was from a 10.3% decrease in hardware sales due to the Switch's March 2017 release, and the decrease was within projections for the quarter. Pre-owned product sales decreased by 5.8%, and worldwide omnichannel software sales decreased by 46% from last year, also due to the Switch's release. For comparison, during the same period last year, software sales increased by 92.9%.

Overall, new hardware accounted for 18.6% of total sales. New software accounted for 24.1%, and pre-owned and value products made up 25.6%.

Digital sales increased by 29.6% and non-GAAP digital receipts increased 24.2%. This does not include Kongegate revenues, as GameStop sold Kongregate to MTG last July.

GameStop reiterated its predictions for the remainder of the year, reassuring investors that the drop in year over year sales across the board was largely attributable to the 2017 sales leap from the Nintendo Switch's release. The company predicted an overall 2% to 6% decrease in total sales for the fiscal year, anticipating the bulk of revenue to come from the back half of the year when more major software releases are planned.

Additional reporting by James Batchelor