GameStop Q4 sales miss; to stop reporting comparable-store sales
GameStop reported fourth-quarter sales that missed analysts’ estimates but said things were off to a “strong start” in the new year.
Net income was $80.5 million, or $1.19 per diluted share in the quarter ended and included a $1.03 per share tax benefit as compared to diluted earnings per share of $0.32 in the year-ago quarter. Adjusted net income was $90.7 million or $1.34 per diluted share, compared to adjusted net income of $83.8 million or $1.27 per diluted share in the prior-year fourth quarter.
Net sales fell to $2.122 billion from $2.194 billion last year, missing Street estimates of $2.21 billion. The videogame retailer attributed the decline to a 12% decrease in its store base and an approximate 27% reduction in store operating days in Europe due to temporary store closures in response to the COVID-19 pandemic. Comparable store sales rose 6.5%.
Global E-commerce sales (included in comparable-store sales) increased 175%, and represented 34% of net sales in the fourth quarter, up from 2% last year.
Game Stop also posted a $92.6 million reduction in SG&A for the quarter.
“I am proud of how our entire organization came together in 2020 to adapt to the challenging pandemic environment, effectively serve our customers’ demand for gaming and entertainment products, and navigate through the year with strong liquidity and a strengthened balance sheet,” said CEO George Sherman.
He noted that GameStop is off to a strong start in 2021, with February comparable store sales up 23%, led by continued strength in global hardware sales.
“As we look ahead, we are excited by the opportunities that are in front of us as we begin prioritizing long-term digital and e-commerce initiatives while continuing to execute on our core business during this emerging console cycle,” Sherman said. “Our emphasis in 2021 will be on improving our E-Commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue.”
Game Stop said that, as a result of prolonged pandemic-related store closures which began in March 2020, which will impact the calculation of comparable store sales this year, it does not currently intend to report this metric in fiscal 2021.
“The company believes total net sales is the more appropriate metric to evaluate the performance of the business at this time,” the retailer stated. “As the company continues to reposition during 2021, it will continue to evaluate the metrics that it believes will most effectively inform investors of the company’s performance, development and outlook.”