GameStop store closures hit 783 stores in the last 2 years

Image: rblfmr/Shutterstock

GameStop has been talking about how the end of the last console generation, coupled with the coronavirus (COVID-19) pandemic, have hit them incredibly hard. With their latest earnings report, they’ve hit the last quarter in which they can complain about the console generation slide though.

For Q3 for the company, which ended on October 31, 2020, they posted net sales of $1 billion. This is down by 30 percent year-on-year, and shows a net loss of $19 million. Compared to the same quarter last year which posted a net loss of $83 million, this is much better.

It should be noted that last year’s net loss of $83 million was still an improvement year-on-year at the time from $489 million. This shows that the company’s overall cost-cutting efforts have gone a long way to reducing that loss.

Still, that didn’t stop GameStop from attributing this year’s losses to the end of the last console generation. The limited hardware availability that this caused is what they say hit their sales so hard, as well as an 11 percent reduction in store base.

However, it’s not all doom and gloom. Ecommerce sales were up by 257 percent year-on-year for the company, and their inventory has been reduced by 33 percent year-on-year. Selling and general administrative costs have plummeted by $115 million, and they even managed to repay $10 million of their debt in this third quarter.

Overall, GameStop is now left with $270 million in short-term debt, and $216 million in long-term debt.

In addition to this news, GameStop confirmed that 462 retail locations were closed as of October 31. This number has moved up with each earnings call, and it seems like the company is going to keep pushing it until they’re profitable.

In 2019, 321 GameStop stores were closed. The company projected that they would close just as many in 2020, with 450 being the rough estimate.

Over the past two years, a total of 783 stores have been closed by the retailer. According to a new presentation from GameStop management, more than 1,000 are expected to close by the end of the current fiscal year in March 2021.

The company has also now completed the wind down of their Nordic business, and divested their Simply Mac business as well.

The company expects the launch of the PS5 and Xbox Series X/S to mark a turning point in the company’s finances. The fourth quarter will start with an unprecedented demand for consoles, and that will continue throughout the rest of the fiscal year. They expect positive sales growth for Q4 due to this.

However, it’s been all too clear that scalpers have secured most of the available next-gen console stock. Whether this correlates to loss of sales for GameStop remains to be seen.