GameStop has announced that it will be closing over 300 stores in 2020, via its latest earnings call, in their ongoing effort to “de-densify.” This means that the retailer is further scaling back its physical presence in the US and its subsidiaries abroad. The company has been steadily shutting down operations at unprofitable stores.
Elsewhere during the earnings call, the retailer revealed that despite coronavirus disrupting commerce across the world and forcing all GameStop stores in the United States to close, there was actually a 2% increase in store sales in March when compared to March 2019. The most likely reasons for this are two-fold. One is that DOOM Eternal and Animal Crossing: New Horizons both released this month. And the other is that GameStop remaining open when it really should have closed causing a surge of traffic from people who had nothing else to do. This is how COVID-19 spreads and is exactly why stores needed to close all at once in the first place.
According to the same call, revenue was down 22% to $6.47 billion, which translated to a net loss of $470.9 million. Both software and hardware sales took heavy losses, while the pivot to collectibles has seen a 42% rise in that area for the retailer. Although it seems unlikely that GameStop can shift $400 million worth of Funko Pops and Pokémon cards.
And once again, GameStop execs highlight that this drop isn’t as bad as it looks. CEO George Sherman says that the company is facing such shortfalls due to consumers opting to wait for PS5 and Xbox Series X before buying games and hardware again, which could be contributing a bit, but it’s certainly not the only reason. And all of this bad press from GameStop’s COVID-19 stunt didn’t help.
“As we begin fiscal 2020, we remain focused on our key priorities, yet recognize that we continue to face the temporary headwind of lower current generation console hardware and software sales as consumers delay purchases in anticipation of new platform launches expected later in the year,” said Sherman.
The recent and ongoing COVID-19 pandemic highlighted desperation that seems rather misplaced. GameStop appeared so desperate to stay open amid a time when other businesses where being ordered to close that many believed they were much closer to bankruptcy than anyone could have guessed. This has not been confirmed, but I would definitely not be surprised if more of their stores don’t open back up after COVID-19 is contained.