GameStop cites ‘unprecedented demand’ in November after sales plummet in Q3
GameStop took a sales hit in the third quarter but expects positive comparable store sales and profitability in the fourth quarter amid demand for the highly anticipated release of new game consoles.
The videogame retailer’s revenue plunged 30.2% to $1.00 billion in the quarter ended Oct.31, missing estimates of $1.09 billion, amid an 11% reduction in the company’s store base. Game Stop closed 74 stores in the quarter, bringing its year-to-date closures to 462. The company also cited the impact of operating during the last few months of the seven-year-long current generation console cycle and the subsequent limited availability of hardware and accessories.
Same-store sales declined 24.6%. Global e-commerce sales increased 257% and are included in comparable store sales.
Game Stop’s net loss narrowed to $18.8 million, or $0.29 a share, compared with a loss of $83.4 million, or $1.02 a share, in the year-ago quarter. Excluding items, the loss came to $0.53 cents per share, while analysts had expected a loss of $0.80 per share.
"Our third quarter results were in-line with our muted expectations and reflected operating during the last few months of a seven-year console cycle and a global pandemic, which pressured sales and earnings," said GameStop CEO George Sherman.
Sherman added that the company begins the fourth quarter with “unprecedented demand” for new video game consoles that launched in November, which drove a 16.5% increase in comparable store sales for the month, despite being closed on Thanksgiving Day and the impact of COVID-19 related store closures, which affected most of its European footprint.
“We anticipate, for the first time in many quarters, that the fourth quarter will include positive year-on-year sales growth and profitability, reflecting the introduction of new gaming consoles, our elevated omnichannel capabilities and continued benefits from our cost and efficiency initiatives, even with the potential further negative impacts on our operations due to the global COVID-19 pandemic,” Sherman said. “Overall, we remain confident in our strategy and look forward to executing in 2021 on the many exciting opportunities to leverage our brand, extensive loyalty member base, and increased digital capabilities to expand our addressable market and product offerings, providing growth in all things games and entertainment.”