The National Retail Federation’s annual report on the Top 100 Retailers is based on sales for the most recently completed fiscal year. The Power Player charts look at retailers with 2019 U.S. sales equal to or greater than 10 percent of sales of the category leader.
What a difference a year makes. Twelve months ago, GameStop was mired in a slump and ending a quarter in which same-store sales plummeted 12 percent as the retailer’s losses widened to $415.3 million. That was after it had shuffled management, eliminated its stock dividend and launched cost-cutting initiatives.
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Facing gaming industry manufacturers preparing to bypass retailers like GameStop and deal directly with consumers, GameStop CEO George Sherman sounded like he was whistling in the dark when he said, “[Game console makers] Microsoft and Sony recognize the market and technology advancement will still require physical disks in the next gaming console cycle.” And, Sherman added, “We are committed to creating a social and cultural hub of gaming within each GameStop store, online and within the digital environment.” Defensively, the company began accelerating the pace of store closings.
This year, amid the rapid rise of COVID-19 infections at the end of March, Sherman was singing a different tune. “As millions of consumers adapt to remote work, play and learning, we're pleased to be able to serve their needs,” he told Wall Street analysts. “In fact, we've seen an increase in store and online traffic over the past few weeks. We remain committed to continuing to meet those needs in a safe environment.”
Though GameStop was shuttering stores like so many other retailers affected by state and local lockdown orders, many locations were allowed to continue operating. Suddenly, the future didn’t look quite so dismal as Wall Street investors pushed the price of GameStop shares up 63.7 percent during the month of April.
Does GameStop have new life, or has it just postponed the inevitable? As Billy Duberstein of Stone Oak Capital puts it: “The dire secular and pandemic-related headwinds running into a strong balance sheet and shareholder activism means GameStop could either go to zero or experience significant gains, even beyond April's 64 percent surge. It therefore remains one of the most interesting turnaround stories to track in the entire market.”