Well-known video game retailer GameStop (NYSE:$GME) saw its shares spiral on Friday, August 25th. This is most likely due to the mixed earnings report it released for its second quarter. Although sales were strong thanks to the recent release of Nintendo’s (TYO:$7974) Switch console, GameStop’s adjusted profits did not meet average analysts’ expectations. As of 12:20 PM EDT on Friday, August 25th, GameStop’s stock has gone down by a drastic 12.72%.

For its second quarter, GameStop saw a revenue of $1.69 billion. This was both an increase year-over-year and a beat on average analysts’ expectations. Although revenue fared well, sales for GameStop’s second quarter were mixed. While new hardware sales saw a 14.8% increase year-over-year, new software sales went down by 3.4% in the same time frame. Pre-owned sales also went down year-over-year by 7.5%. Despite these falls, however, comparable-store sales saw a 1.9% growth and digital sales went up by a impressive 28.1%. Collectible sales went up by 36.1% and technology brands sales went up by 7%. Overall, sales have been strong for GameStop’s second quarter.

Despite rather strong sales, however, Non-GAAP earnings for GameStop’s second quarter was $0.15 – a decrease from the $0.27 it saw in 2016’s second quarter. The non-GAAP earnings for this quarter also just narrowly missed average analysts’ expectation of $0.14. GameStop cited the fall to be due to higher costs for marketing as well as other general and administrative expenses.

For its third quarter, GameStop is expecting an adjusted earnings per share of around $3.10 to $3.40. Comparable sales growth is expected to be around -5% to 0%.

The poor performance of one of GameStop’s most profitable business – pre-owned and new video games, consoles, and/or other related products – has left investors concerned over the company’s future growth. GameStop’s video game products segment’s gross profit went down by 7.5%.

GameStop, like many other retailers, is experiencing challenges from the rising prominence of digital sales. As such, the company’s core business – the selling of physical video games – has been slowing down. In fact, many believe that it will eventually be non-existent. PC games have been made available digitally a long time ago, and consoles are slowly but surely following the in the footsteps of PC. As such, investors and analysts alike are worried about whether or not GameStop’s earnings will be sustained in the long-term.

Featured Image: twitter