Despite the very real threat of the COVID-19 pandemic sweeping the world, GameStop is still soldiering on with business. Following the news that GameStop and EB Games were defying mandated closures and seeing themselves as “essential retailers,” the subsequent turnaround in their stance remains in line with the company’s “de-densification plan”. However, although the company has seen increased business in the wake of the virus, that plan indicates that at least 321 stores will close this year.
“We continue to focus on optimizing our global store fleet in fiscal 2019 and closed a net total of 321 stores inclusive of 333 closings and 12 openings,” GameStop’s Chief Financial Officer, Jim Bell, stated in a recent earnings call. “In fiscal 2020, we will continue in our efforts to de-densify our store base, focused on maximizing product productivity of the entire fleet.”
GameStop management does, sadly, “anticipate store closures to be equal to or more than 320 net closures” in 2020. Rather than cause panic, however, they “want to emphasize that these store closures are a very specific and proactive part of our de-densification plan and they are not related to recent business trends.”
In that same earnings call, CEO George Sherman revealed GameStop has “seen an increase in store and online traffic over the past few weeks.” This was corroborated by Bell as well.
“Despite having most of our European stores closed for the last few weeks, the increased demand for our products across the world has led to a positive 2% comparable sales results for the March month-to-date period through Saturday,” Bell emphasized.
That said, it is less impressive as the time period does not include all of GameStop’s US closures. The release of both DOOM Eternal and Animal Crossing: New Horizons during this period has also helped.
Despite the situation in the US, GameStop says they are still “fulfilling increased demand.” Through “contactless curbside delivery,” consumers can still get their fix. Such stores only require a single employee, with staff taking shifts to fulfill duties.
Tough times ahead
Although GameStop is bringing industry legend Reggie Fils-Aime onto its board, things still look bleak. The latest fiscal quarter ending on February 1 continued a declining trend. Store sales were down 26% for the holidays, with a 19.4% drop for the whole year.
The retailer plans for 2020 to remain a transitional year. Much depends on the upcoming console launches of the PlayStation 5 and Xbox Series X. GameStop says that its bottom line won’t fully turn around until these consoles launch. Of course, there are also fears that the consoles will miss their initial release window. However, Sherman believes that no indication of a delay has emerged.
While a new console launch will bring more business, it remains unlikely to change anything for the beleaguered retailer. Digital sales will see a boom during this trying time, and that could be the final nail in the coffin. Rather than being a transitional year, 2020 might just be GameStop’s final year.