Video game retailer GameStop saw a sharp rise in online sales but also a steep decline in income during first quarter of 2020, the company noted in a June 10 earnings report.
GameStop reported an adjusted net loss of $103.9 million in first quarter 2020, compared to a net income of $7.5 million the previous quarter.
“While we delivered a loss for the quarter in total, our performance included total sales just shy of our original expectations, even as stores closed due to the COVID-19 pandemic and key video game titles shifted to the second and third quarters, exacerbating the headwind from operating in the final stage of a console cycle,” GameStop chief executive George Sherman said in a statement Wednesday.
As civil unrest mounted across the United States in recent weeks, GameStop was forced to close roughly 100 stores, 35 of which will remain closed for the foreseeable future to repair “extensive physical damage.”
Not surprisingly, GameStop said its quarterly in-store sales declined by 17% from the prior year, a direct impact of the ongoing coronavirus pandemic which caused the company to close the majority of its stores March 31 — after arguing that its gaming products were “essential retail.” Online sales of gaming hardware and software continued to grow, however.
“Our e-commerce sales grew 519% in the first quarter and over 1,000% during the six weeks that our store base temporarily closed to customer access,” Sherman said. “We believe this reflects the loyalty of the GameStop customer and the confidence they place in us as their preferred place to shop.”
Some GameStop locations remain partially open during the pandemic, but only for curbside pickup. At the time it announced the partial store closures, GameStop also noted it was facing difficulties paying rent and would not make payments on certain leases as the pandemic continued.
Sherman, GameStop’s executive team, and many lower-level employees continue to take pay cuts as nationwide retail struggles to return to normal operations. Beginning April 23 Sherman took a 50% pay reduction and GameStop’s chief financial officer Jim Bell took a 30% cut. GameStop employees worldwide saw their pay slashed 10-30%.