GameStop (GME 0.29%) today reported a scorching 800% surge in its e-commerce sales and a slight beat on revenue during the second quarter of 2020. Nevertheless, it missed analyst consensus forecasts for earnings per share. Investors already expected the video game and software retailer to take a heavy negative hit from the COVID-19 pandemic, and CEO George Sherman still says the "second quarter saw strong progress toward our strategic initiatives."
Net sales fell 26.7% year over year to $942 million, while the consensus estimate reported by Zacks Equity Research was $937.5 million and a 27.1% sales drop. GameStop therefore delivered a slim 0.48% positive surprise above analyst predictions. Looking at Q2 2019's $0.32 loss per share, analysts expected a $1.27 loss per share. Actual adjusted EPS amounted to a $1.40 loss per share, $0.13 higher than anticipated.
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Sherman identified the company's 800% growth in e-commerce sales as a strongly positive sign for the future, also citing a 50% year-over-year drop in inventory. GameStop trimmed selling, general, and administrative expenses by $133.7 million. Net long-term debt was slashed nearly in half, from $419.1 million in Q2 2019 to $215.9 million in Q2 2020. Despite paying down considerable debt, the company ended the quarter with $735.1 million in cash, up approximately 73.4% year over year.
Looking forward, GameStop emphasizes the possibilities created by its newly constructed "frictionless digital ecosystem." While guidance remains officially suspended because of the ongoing pandemic, Sherman remarked, "We believe we are ready, with expanded service and payment options, to handle the expected surge in demand and participate in a very significant way in the console launches later this year."
