You might think that GameStop being forced to close a majority of its global retail storefronts due to concerns about the novel coronavirus would be bad for business. But CEO George Sherman said in an earnings call last night that the retailer has “seen an increase in store and online traffic over the past few weeks” that might actually help its bottom line.
“Despite having most of our European stores closed for the last few weeks, the increased demand for our products across the world has led to a positive 2% comparable sales results for the March month-to-date period through Saturday,” GameStop CFO Jim Bell said during the call. “As millions of consumers adapt to remote work, play, and learning, we’re pleased to be able to serve their needs,” Sherman added.
Though that’s an impressive statistic at first blush, it looks a bit weaker when you put it in context. “Through Saturday,” for instance, doesn’t cover the time since GameStop finally decided to close all of its US stores (which make up the vast majority of its worldwide retail space) to regular foot traffic. “I think when this all began, there was a pretty good level of demand that we saw while our stores were fully opened and that is the sales period that Jim talks about when you talk about through Saturday of last week,” Sherman noted.
The first few weeks of March also saw the release of Doom Eternal and Animal Crossing: New Horizons, two highly anticipated games that weren’t matched by any similarly large March launches in 2019. Given that, a mere 2-percent bump in year-over-year sales could be seen as relatively disappointing.
Even since shutting down normal operations in the US, though, Sherman said those stores are “still fulfilling increased demand for our products through our contactless curbside delivery process we call delivery at the door.” Most of those “curbside delivery” stores are operating with a single employee these days, Sherman said, with staffers volunteering for shifts “so it begins with a team member that wants to be there.”
A tough year coming
Caveats aside, GameStop is looking for any small signs of improvement after months and months of bad news dating to well before the virus outbreak. That bad news continued into the company’s latest fiscal quarter (which ended Feb. 1). Comparable store sales were down a whopping 26 percent during that crucial holiday sales period, rounding out a 19.4 percent drop for the full fiscal year.
GameStop closed 320 of its more than 5,000 global stores during fiscal 2019, and Sherman said it plans to close at least that many again in the 12 months to come. But he insisted on the earnings call that this “de-densification” is part of a long-term plan that’s not “related to recent business trends.” Those closings will lead to “far more efficient, far more profitable stores” as “we transfer sales to nearby stores” that will remain open, Sherman said.
GameStop, like much of corporate America, is suspending formal earnings guidance until the full economic effects of the coronavirus are better known. But Sherman said the company continues to see 2020 as a “transitional year” whose bottom line won’t fully turn around until “a material sequential improvement of the console launch.” And despite some early worries among industry watchers, Sherman said that “as of now, we have no indication of any impact on the product launch or delivery date [for the Xbox Series X and PlayStation 5], which is expected in time for holiday 2020.”
We’re a bit skeptical those new consoles will be enough to buoy the company in the long term, though. That might be especially true if extended coronavirus shelter-in-place orders get more gamers used to the idea of downloading new titles without the need to leave the house.