Despite the higher ecommerce sales, Q1 total sales dropped 34%. The video game retailer also reported a net loss of nearly $166 million.

Video game retailer GameStop Corp., like many store-based merchants, is leaning heavily on omnichannel fulfillment as the COVID-19 pandemic continues to disrupt the way consumers shop.

GameStop (No. 35 in the in the 2020 Digital Commerce 360 Top 1000) reported sharply lower revenue in its first fiscal quarter, which ended May 2, compared with the comparable quarter a year earlier. But global ecommerce sales soared 519% for the period, including a more than 1,000% year-over-year increase for the 6 weeks following coronavirus-related store closures, the retailer reported.

GameStop also reported its second-quarter ecommerce sales are off to a great start: In May, ecommerce sales jumped 1,400% year over year. 

On March 22, GameStop temporarily closed a third of its 3,526 U.S. stores. For the remaining two-thirds, the retailer  limited the stores to curbside pickup for orders placed online.

Outside the United States, GameStop was “largely closed” during the quarter, CEO George Sherman said in a June 9 conference call with analysts, according to a Seeking Alpha transcript. In addition to stores, distribution centers in Europe, Canada and New Zealand were closed because of stay-at-home directives, leaving the retailer unable to fulfill ecommerce orders in those countries. 

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“Across our global operations, only Australia, representing roughly 10% of our global fleet of stores, remained fully opened during the final 6 weeks of the quarter,” Sherman said.

As a result, global comparable-store sales—which is revenue generated by retail stores compared with year-earlier sales—decreased 17%, excluding stores closed because of the COVID-19 pandemic. After including the impact of those, comparable-store sales dropped about 30%. A bright spot was Australia, where all stores remained open during the first quarter. In that country, comparable-store sales increased by 35%.

GameStop says it has been phasing in the reopening of its stores as officials lift the restrictions related to COVID-19 and implementing “strict sanitary processes and social distancing measures.” By the end of May, about 85% of GameStop’s U.S. locations were open with limited customer access, or for curbside fulfillment, while 90% of non-U.S. stores were open, the retailer says. However, due to the social unrest following the police killing of George Floyd in Minneapolis, GameStop temporarily closed about 100 stores GameStop previously reopened. Of those, roughly 35 “will be closed for the foreseeable future given extensive physical damage,” GameStop reported. 

In addition to the 1,400% increase in May ecommerce sales, GameStop’s comparable-store sales declined a relatively modest 4.0% for the month.

Beginning on March 22, GameStop began offering a contactless delivery service called [email protected] at all U.S. store locations where state and local laws allowed. Shoppers have the option to place an online order for pickup at their local stores. Once their orders are ready, the shoppers then call the store once they’re waiting outside. A store employee then brings the order out to where the customer is waiting.

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GameStop’s liquidity

As of May 2, 2020, the GameStop had about $570 million in total cash available, reflecting $135 million drawn from a revolving credit agreement, the retailer reported.

Once the pandemic started, GameStop took several steps to shore up its financial position. Those include temporarily slashing base salaries by 50% for Sherman and 30% for other top executives. The retailer also temporarily cut cash compensation for the board of directors by 50% and offered corporate support staff the option of a temporary furlough or reduced workweek/reduced pay program. Other employees received pay cuts of 10% to 30%. 

The retailer says it lowered capital spending and did not make some lease payments and is in discussions with landlords about ongoing rent payments, including some combination of abatement, deferral, or restructuring of future rents during this period of COVID-19 related closures.

On June 4, GameStop made a private offering to refinance $414.6 million of outstanding 6.75% notes due in 2021. Gamestop wants investors to swap those notes for new ones with a 10.0% interest rate. The new notes will become due in 2023.

For the 13 weeks ended May 2, GameStop reported:

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  • Net sales of $1.02 billion, down 34.0% from $1.55 billion for the comparable period in 2019.
  • A net loss of $165.7 million, compared with net income of $6.8 million a year earlier.
  • An operating loss of $108.0 million, compared with operating earnings of $17.5 million in the prior-year first quarter.
  • Sales of hardware and accessories represented 50.3% of total sales for the quarter, up from 42.4% a year earlier. Those sales include new and pre-owned hardware, accessories and hardware bundles in which hardware and digital or physical software are sold together in a single SKU.
  • Software represented 40.8% of total sales for the quarter, down from 47.4% in the year-ago period. Those sales include new and pre-owned video game software, digital software and PC entertainment software.
  • Collectibles represented 8.9% of sales for the quarter, down from 10.2% in the year-earlier quarter.

GameStop operates approximately 5,300 stores across 14 countries.

Percentage changes may not align exactly with dollar figures due to rounding.

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