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Gamestop Gives a Positive Update on Its Curbside Business

By Jon Quast – Apr 21, 2020 at 6:35PM

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The retailer is still generating revenue, but it's also cutting costs to preserve its liquidity.

Video-game retailer GameStop (GME 0.64%) updated investors on Tuesday with positive news regarding its curbside business. By continuing to allow customers to buy online and pick up their purchases outside GameStop locations, the company has retained 90% of its planned sales.

Considering that GameStop stores have been closed to walk-in customer traffic since March 22, its sales are dependent on these curbside pickups. And the retailer implemented its omnichannel strategy just in time -- its buy-online-pick-up-in-store feature was only rolled out in 2019. 

A shopping basket on a computer represents e-commerce.

Image source: Getty Images.

Still hanging on

The company's cheerful take on its results comes with a couple of caveats. First, GameStop had already withdrawn its 2020 guidance. This report says that its sales were 90% of what it had been expecting in light of the coronavirus pandemic -- not 90% of the sales volume it had been anticipating previously. Second, curbside pickup is only available at two-thirds of its locations, so a significant number of stores still are making no sales.

Shares of GameStop have been in a long downward spiral due to its poor operational results. In 2019, net sales fell 22%, and the company delivered a massive $471 million net loss. It has been years since a video game console maker has launched a new platform, which has been a major drag on GameStop's sales. This company was having a hard time long before the COVID-19 pandemic.

While it's good that the retailer has been able to keep making some sales, not all of the news it delivered Tuesday was so rosy. GameStop's executives are taking pay cuts. The company is furloughing workers, and is cutting pay and hours for some of those that it's keeping on the job. Furthermore, the company has chosen to miss some lease payments in an effort to stay liquid throughout the coronavirus crisis.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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