March 27, 2020
Following a fiscal quarter that saw GameStop slightly alter a downward fiscal trajectory, CEO George Sherman told analysts the world’s largest video game retailer would shutter more than 300 stores in the current 2020 fiscal year. Most of the chain’s current 5,500 stores remain closed to foot traffic due to coronavirus concerns, with commerce limited to online and curbside deliveries.
GameStop saw same-store sales drop more than 19% in the most-recent fiscal year while narrowing its net loss to $470.9 million from a net loss of $673 million in the previous-year period. The chain realized a 27% decline in hardware and accessories and a 22% decline in software sales. Collectible sales decreased 9% to $245 million, driven by traffic declines in domestic stores. As a percent of total sales, collectibles topped 11.2%.
Speaking on the March 26 fiscal call, CFO Jim Bell said the store “de-densification” strategy includes winding down operations in the Nordic countries of Denmark, Finland, Norway and Sweden and rebranding select locations into newly designed concept stores.
“In 2020, we will continue our work to densify our global store fleet and anticipate store closures to be equal to or more than the 320 net closures we saw in fiscal 2019 on a global basis,” Bell said, alluding to 333 store closings and 12 openings.
Bell and Sherman view 2020 as a transitional year for GameStop and the gaming industry awaits new-edition consoles from Microsoft and Sony launching in the late fall.
“Notwithstanding the improved trend we’ve experienced over the past few weeks … over the first three fiscal quarters we expect a continued challenging sales environment, followed by a material sequential improvement of the console launch,” Sherman said.
Indeed, despite having most of its European stores closed for the last few weeks, increased demand for gaming products across the world due to governmental quarantines against the spread of the coronavirus, led to a positive 2% comparable sales results through March 21.
“Everyday brings a new challenge and new information as we navigate this very dynamic environment brought on by COVID-19,” Bell said.