While GameStop manages to turn a fourth-quarter profit, the brand will be closing at least 320 stores in 2020, while forced closures related to COVID-19 coronavirus continue to represent a challenge for the struggling chain. The earnings report comes only a couple weeks after former Nintendo of America President Reggie Fils-Aime joined the GameStop board of directors, followed by reports of widespread cancellations of release events for popular games Animal Crossing: New Horizons and Doom Eternal.
GameStop saw multiple rounds of layoffs in 2019, along with announcements for a brand new store strategy involving a greater focus on Esports, community gaming, retro games, and even game café experiences. However, coronavirus was a sudden roadblock that GameStop was not expecting. The company quickly went from claiming its stores counted as “essential” services, while forcing GameStop stores to stay open, to announcing that all stores in North America (among other locations) would be closed to everything except curbside pickups. GameStop employees were left to find their own sources of disinfectant or sent home without pay, making a tense situation even worse. GameStop has not announced a definitive date for re-opening stores at this time.
However, as Gamesindustry.biz reports, the latest earnings data paints a slightly better picture of the chain’s status. Although the company reported a net revenue loss of $470.9 million (down around 22%), this loss was lower than previous reports, and GameStop confirmed a net income of $21 million. Notably, while gaming software and hardware sales for the full year were down (as are GameStop's stocks), the only area GameStop saw sales growth in was its collectible sales, which grew 4%. Further consolidation was also confirmed: The company said that it would be closing at least as many stores as it did in 2019, meaning more than 300 locations should be shut down by the end of the year. One reason the brand continues closing stores is to reduce “density” like in places where two GameStop stores are close beside each other or in the same mall – a consequence of GameStop buying out a number of competitors years ago.
GameStop also announced several new efforts to re-orient the brand in 2020 and improve revenue figures. This includes a new focus on digital media sales and digital revenue pushes with “key partners,” as well as expectations of increased sales when the new generation of consoles launches later this year. The fourth-quarter announcement also mentioned that social distancing regulations had given revenue a recent bump as more people turned to popular games while stuck at home.
This leads to an obvious question – when GameStop stores re-open their doors in the coming weeks or months, how many will actually re-open? Will GameStop use this forced closure to weed out unwanted stores earlier than expected? On the same note, it’s unknown if the chain will still see continued sales from people staying at home, or if closures become a revenue loss that’s too high for the company to bear. 2020 has quickly become a make or break year for this game seller, and it's unclear as to just where GameStop's story goes next.
Source: Gamesindustry.biz