GameStop (GME) Reports 2020 Holiday Sales Results

GameStop Corp. (NYSE: GME), today reported worldwide sales results for the nine-week holiday period ended January 2, 2021 reflecting a 4.8% increase in comparable store sales and a 309% increase in E-Commerce sales. Total sales declined 3.1% driven by an 11% decrease in the company’s store base due to its planned de-densification strategy, temporary store closures around the world due to government mandates and lower store traffic, particularly later in December, due to the significant impacts of COVID-19. The Company believes the industry-wide traffic decline during the Holiday period adversely impacted comparable sales for the nine-week period in the high single-digit to low double-digit percentage point range. In addition, significant worldwide supply chain constraints impacted the ability to distribute products to customers across all sales channels. However, the Company experienced unprecedented demand for recently launched gaming consoles, and while consumer demand far outpaced constrained supply in the nine-week period, the Company believes these products will drive sales well into 2021 as console availability from our suppliers improves later in the year.

Holiday Sales (the nine-week period ended January 2, 2021 compared to the nine-week period ended January 4, 2020)

• Total comparable store sales increased 4.8% compared to last year and reflected a 29.6 percentage point sequential improvement from the third quarter of fiscal 2020. These positive results were adversely impacted in the high single-digit to low double-digit percentage point range, as a result of a significant reduction in consumer traffic related to the increase in COVID-19 cases;
• Net sales were $1.770 billion, a 3.1% decrease compared to 2019, as strong console demand was offset by store closures under the Company’s planned de-densification strategy, temporary store closures mandated by local governments due to COVID-19, and industry-wide limited supply of new gaming consoles, and supply chain constraints broadly;
• E-Commerce sales, which are included in comparable store sales, rose 309% and represented approximately 34% of total company sales, with total worldwide E-Commerce sales year to date reaching over $1.35 billion, far exceeding the Company’s $1.0 billion growth objective;
• Regional Sales, in Australia/New Zealand, where the Company’s operations were materially less impacted by the effects of the COVID-19 pandemic, total comparable sales for the nine-week period increased approximately 31%, outperforming the Company’s other operating regions.

George Sherman, GameStop’s chief executive officer said, “GameStop maintained its status as the omni-channel destination for gaming and entertainment with unprecedented demand for the new gaming consoles and a significant increase in E-Commerce sales. Demand for the new generation of consoles remains very strong, and as a result, we anticipate the consumer’s excitement for the new console technology will benefit us going forward well through 2021. We reported a 4.8% increase in comparable store sales, including over 300% increase in E-Commerce sales reflecting demand for new consoles, continued strength for Nintendo Switch and our expanded gaming product assortment. While E-Commerce sales contributed approximately 34% of total sales for the first nine weeks of the fourth quarter, our sales growth progression also includes an adverse impact to comparable transactions related to the meaningful drop in retail traffic during the holiday sales season due to an increase in COVID-19 cases around the world.”

Mr. Sherman continued, “Overall, we remain confident in both the positive growth aspects for 2021 driven by our strategy to add new and exciting product revenue streams across all things games and entertainment and the strong demand for the new generation for console-based video game products We look forward to executing on both of these areas in 2021 to expand our addressable market and product offerings supported by the many exciting opportunities to leverage our brand, extensive loyalty member base, and improving digital capabilities.”

Fiscal Fourth Quarter 2020 Outlook (13 weeks ending January 30, 2021)The Company continues to focus on efforts that position it to manage through this unprecedented time, including maintaining its balance sheet strength, prioritizing the allocation of resources to areas of the business that produce strong cash flow, reducing expenses across the business, developing and expanding its digital strategy, and intensifying inventory discipline. Due to the uncertainty around the duration and evolving impact of COVID-19, the Company is continuing to suspend guidance, however, unless further unforeseen COVID-19 related impacts occur, it expects to realize positive comparable store sales results and profitability in the fiscal fourth quarter.

The Company anticipates reporting fourth quarter and full fiscal year 2020 results in late March.

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