GameStop’s shares have divebombed over 17 per cent despite it reporting a 519 per cent increase in online sales during its first quarter.
The video game retailer’s spike in online sales were not enough to offset a major drop in profits as its stores remained in lockdown.
In its first quarter GameStop reported an operating loss of $108 million, dropping from profits of $17.5 million a year earlier.
Adjusted EBITDA for the quarter was -$75.5 million, down from $42.7 million in the first quarter of 2019.
Comparable store sales dropped 17 per cent, seeing it post revenues of $1.02 billion, below analyst estimates of $1.07 billion.
The retailer sparked controversy in April after it refused to close its stores despite a country-wide lockdown, arguing that it was “essential retail”.
Where it could, GameStop has been running a curbside service in which customers can collect their items from outside the store.
“As the pandemic spread, we leaned in on our upgraded omni-channel capabilities to fulfill customer orders through curbside pick-up where available, we reduced discretionary spending and enhanced our liquidity while continuing to advance our strategic priorities,” its chief executive George Sherman said.
“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.
“As we begin the second quarter, we are cautiously and prudently navigating the near-term, as we are operating in the last few months of the current generation console cycle and believe we have experienced a pull forward in demand for end-of-life inventory given a surge in gaming product demand following the global stay-at-home orders.”