GameStop has released its financial results for the quarter ending October 31, 2020 and, at the same time, offered a peek into what November's new console launches looked like for the retailer.
It is worth noting that the third quarter closed weeks before the PlayStation 5 and Xbox Series X made their way to store shelves, so numbers from those launches won't be covered in the Q3 report.
However GameStop CEO George Sherman notes that, so far, new console launches leave the company optimistic that it'll report an increase in sales at the end of Q4, something that hasn't happened in "many quarters."
GameStop has long credited the end of the Xbox One/PlayStation 4 console generation as the driving force behind a string of declining sales numbers, so it'll be particularly interesting to see how next quarter's numbers actually come out. As a preview, Sherman notes that "unprecedented demand in new video game consoles" drove a 16.5 increase in comparable store sales during November from 2019.
"We anticipate, for the first time in many quarters, that the fourth quarter will include positive year-on-year sales growth and profitability," reads Sherman's statement. While the PS5 and Series X are listed as the main forces behind that potentially positive quarter, Sherman also touts GameStop's own "omni-channel capabilities" (namely, it's recent shift toward ecommerce) and ongoing cost cutting measures.
Like many others, GameStop isn't sharing a full Q4 outlook due to the uncertainty around COVID-19, but does note that net sales for November came in at $791.1 million compared to $747.6 million in November of 2019.
Looking to the quarter ending October 31, GameStop reported a net loss of $18.8 million, compared to a loss of $83.4 million the year before.
The report lists just over $1 billion in net sales for Q3, a 30.2 percent decrease in sales year-over-year. GameStop notes specifically that this decrease reflects three factors: an ending console generation, the delay of several major titles out of the quarter, and the closure of 11 percent of its brick-and-mortar stores due to cost cutting measures.
On that cost cutting note, GameStop tells investors it has now closed around 800 stores since 2019, with plans to cross 1,000 stores closed by the end of its 2020 fiscal year in 2 months time. A presentation notes that it has now completed the wind down of its Nordic presence started last december, and reduced selling, general and administrative expenses by $440 million since mid-2019.
GameStop's ongoing reboot is shifting more and more toward ecommerce as well. The company says that its focus is on "building a digital-first, omni-channel model" and notes that e-commerce sales are up 257 percent for Q3 and up 400 percent year-to-date.
"Overall, we remain confident in our strategy and look forward to executing in 2021 on the many exciting opportunities to leverage our brand, extensive loyalty member base, and increased digital capabilities to expand our addressable market and product offerings, providing growth in all things games and entertainment," reads a statement from Sherman.