As you may know, businesses’ fiscal (financial) years don’t always correspond with calendar years. Nintendo, for instance, has their fiscal year run from April 1st to March 31st, putting them currently in fiscal year 2019 until March 2020. Meanwhile, Apple’s fiscal year 2019 will end this September.
But no matter when a fiscal year runs, quite a few reports come out around March. Publicly traded companies report every quarter, and between February and April all the holiday sales period would have ended and tallied, giving a good picture of their financial status.
That being said, I’ve discussed several companies that sell anime and manga in this column. And now that sales reports and operating expenses are being posted, it’s time to see how they are doing.
The Check-In
Let’s start with Barnes & Noble. They had some good news: they had their best holiday season in years.
In that same announcement though, they warned that this came at the expense of higher spending on ads and promos. So although they made a profit and had their best quarter in three years, holiday sales ended up being weaker than expected. So much so that Barnes & Noble is already preparing for their yearly earnings to be between $20 and $60 million less than estimated. While their sales reports were a mixed bag, at least there’s room for optimism, especially as they open new stores.
Best Buy, however, had a strong Q4, beating expectations. In fact, the chain had their best overall results since the Great Recession even though it closed their Best Buy Mobile locations. Smartphone sales were less than expected, but gaming — particularly the Nintendo Switch — was one of their leading categories. Another factor was the focus on tech support programs.
FYE, the media chain run by Trans World Entertainment, also saw an increase in same-store sales this past quarter. But like Barnes & Noble, this was accompanied by bad news: a total loss of nearly $100 million for fiscal year 2018. Most of this is due to etailz, Trans World Entertainment’s service that partners with businesses to sell online.
But Trans World also closed 50 stores, bringing the total number of FYE locations to just over 200. Trend and collectibles, however, were a bright spot as FYE shifts away from media products, which once was their primary focus.
This also applies to GameStop. Collectibles (at least at brick-and-mortar stores) are helping stem decreased sales in physical media. And GameStop’s losses were certainly significant: the video game store chain lost almost $190 million in Q4 for a total loss of over $670 million for the year.
Just as Trans World Entertainment’s acquisition of etailz seems not to be panning out, ThinkGeek is also underperforming. These results probably made it difficult to find (or come to terms with) a buyer.
What Does All This Mean?
As you can see, a lot of similar themes: people are shopping their local stores, they like the figures and other merchandise, but it’s not enough to carry them forward as they are right now.
Best Buy is an exception thanks to its tech and appliance sales to support their expansion into toys and collectibles, but I wonder if gaming sales will slow down a bit as more and more people’s now-discontinued Gamers Club Unlocked membership (which gave 20% off gaming purchases) expires.
But even Barnes & Noble’s profits is not necessarily great. As The Motley Fool points out,
“There’s very little left to cut when it comes to operational expenses, although the chain may have some leverage to negotiate lower rents as leases come up, due to the current retail climate. It also has more space than it needs in many locations, as CDs and DVDs are no longer a viable market.”
Don’t get me wrong. It’s good news that Barnes & Noble is posting a profit. But I don’t think Barnes & Noble is going to like having to keep doing buy two, get a third free on manga sales in order to make a small to modest profit.
I also didn’t realize how small FYE has gotten. There are already no stores in states like Nevada and Vermont, and states like Wisconsin and Kansas have only one. Trans World Entertainment could close locations in places like Pennsylvania, which has a whopping 20 FYEs, but I don’t know if it can survive with significantly fewer locations. Will travelers visit an FYE over all the other rare and/or specialty stores that aren’t available in their area? Can they survive just on local business despite all the competition from places like Best Buy and Hot Topic?
GameStop, on the other hand, has 3,800 stores in the US, so it has room to close branches that are not doing well or have some overlap in their area. They probably will need to with such heavy losses. Of course, I think they also could help themselves by doing things like improving their online ordering system. This reddit user has an open order from 2015, and another says they have one from 2012 — and I thought mine from 2017 was bad!
The good news is that we may see more anime merchandise at these chains. Anime like My Hero Academia are just incredibly popular. Pokemon Sword/Shield being released later this year will bring back Poke-mania. Games like Dragon Ball FighterZ and Kingdom Hearts target many types of fans: gamers, anime otaku, etc. Stocking more figures, hats, plushies, and the like can’t be any sillier than selling, say, selling “Liquid Rage” from Aggretsuko.
After all, digital media is just booming, and while online places like Amazon are awesome at finding what you want, they’re not very good at the random “so awesome, gotta have it!!” purchases. If Barnes & Noble, FYE, and/or GameStop don’t want to end up as the next Toys R Us or Sears, those impulse buyers and collectors are going to be key moving forward. With online services like Netflix investing heavily into anime and more manga being available to read for nothing or next to nothing, soon we could be seeing ever larger versions of these stores’ anime sections and store-in-a-store approach.