GameStop swings to Q1 loss but digital sales soar
GameStop reported a loss for its first quarter as its stores were shuttered due to COVID-19 but its online sales jumped as the company pivoted to an online and curbside pickup model.
The videogame retailer reported a net loss of $165.7 million, or $2.57 a share, for the quarter ended May 2, compared with net income of $6.8 million, or 7 cents a share, in the year-ago period. The company’s adjusted net loss was $103.9 million, or $1.61 a share.
Revenue declined 17% to $1.02 billion. Global e-commerce sales surged 519% from the year-ago quarter.
Total global comparable store sales decreased 17% excluding stores that were closed during the first quarter as a result of the COVID-19 pandemic. After including the impact of stores that were closed for the majority of the quarter due to the COVID-19 pandemic, comparable sales decreased by approximately 30%.
“I was pleased with our team’s ability to adapt quickly and despite significant disruption,” GameStop CEO George Sherman said on the company’s earnings call. “Stores managed to retain most of their planned sales volume to online and curbside pickup, and delivered total sales for the quarter just shy of original expectations.”
GameStop has been opening its stores in phases as restrictions have lifted and in accordance with mandates. At the end of May 2020, 85% of its U.S. locations were open to limited customer access or curbside delivery and 90% of its international locations were open. However, due to the protests after the killing of George Floyd, the retailer temporarily closed about 100 stores that had been reopened. About 35 of these locations “will be closed for the foreseeable future given extensive physical damage,” the company stated.
GameStop is expected to benefit during the next two quarters from several software launches that were delayed due to the COVID-19 outbreak. Also, it expects a boost when the new PlayStation and Xbox consoles are released in time for holiday sales.
“As we begin the second quarter, we are cautiously and prudently navigating the near-term, as we are operating in the last few months of the current generation console cycle and believe we have experienced a pull forward in demand for end-of-life inventory given a surge in gaming product demand following the global stay-at-home orders,” stated Sherman. “That said, we believe the performance we achieved despite multiple headwinds is further evidence of the power of GameStop and the advantages that we possess driven by our global footprint, knowledgeable sales associates and strong loyalty base. We believe these attributes along with our intense focus on expense and working capital management have us poised to capitalize on the hardware and software sales growth expected as several new software titles and next-generation consoles are introduced later this year.”