With 2020 finally over, companies are starting to announce how well they did during the holiday season. And while one would expect especially strong sales for video game retailers given the launch of the PlayStation 5 and Xbox Series X, it turns out that not all brick and mortar retailers performed as well as investors might have hoped. GameStop, in particular, had lower holiday sales this year than last year.
GameStop’s latest financial report details the nine-week period ending on January 2, 2021, compared to the nine-week period of last year, which ended on January 4, 2020. The company reported net sales of $1.770 billion, a 3.1% decrease compared to the previous year. GameStop specifically cited the coronavirus pandemic as the primary reason for the decline, as it resulted in temporary store closures and lower store traffic.
However, it wasn’t all bad news for the company. GameStop reported that e-commerce sales rose 309%, equating to 34% of the company’s total sales for that period. Year to date, GameStop’s e-commerce sales totaled $1.35 billion, which is above the $1 billion target the company had originally set for the year. Additionally, the company reported a comparable sales increase of 31% for the holiday season in Australia and New Zealand, due to the company being less impacted by the coronavirus pandemic in those markets.
GameStop CEO George Sherman stated that the company “maintained its status as the omni-channel destination for gaming and entertainment with unprecedented demand for the new gaming consoles and a significant increase in E-Commerce sales.” Sherman went on to state that the company expected strong growth in 2021. “Overall, we remain confident in both the positive growth aspects for 2021 driven by our strategy to add new and exciting product revenue streams across all things games and entertainment and the strong demand for the new generation for console-based video game products”
GameStop has experienced a tumultuous few years, as the company struggles to adapt to an increasingly digital market of game sales. New hardware encourages people to go to stores, which does drive sales, but the coronavirus pandemic and constrained PS5 and Xbox Series X supply have hindered the company’s ability to perform. With production on both consoles supposedly increasing and coronavirus vaccines rolling out, retailers worldwide may be less impacted in 2021 than they were in 2020.
Conversely, digital video game sales growth may indicate a behavioral change in consumers, which could have long-lasting negative effects on GameStop. Even before the coronavirus pandemic, digital game sales were on the rise, as physical media continues to decline across multiple entertainment industries.
Next-gen consoles may still be a blessing for GameStop if supply improves, and had the report isn’t entirely negative taking into consideration the coronavirus pandemic fueling store closures. The past six months have seen GameStop stock grow from $4.26 per share to $19.87 per share, so there’s has been healthy growth in that regard.
Source: GameStop
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