One of the places that you will be able to get your hands on a next generation console from either Sony or Microsoft is GameStop, at least for the foreseeable future. This week GameStop announced their second quarter earnings for fiscal year 2020 and although there are a few bright spots in it, spoiler alert, it’s mostly bad. The reported period is ending August 1, 2020, which means that we have a full quarter of quarantine being observed. One thing that we have seen during the quarantine periods from other publicly traded companies like NNTDOY, ATVI, and TTWO is that gaming has seen a massive surge, especially digitally.

One of the few bright spots of the GME report was how their digital sales have increased, which shoudln’t be a surpise at all, considering the state of the world at the moment. GameStop saw their global E commerce sales rise 800%, which tells me something right off the bat. The average increase of digital sales from the previously mentioned other companies was around 80 percent and this means that previously Game Stop had been neglecting their online sales and focusing on brick and mortar, which even before Covid happened, we are looking at 2019 and 2020. One of the reasons that GameStop and their position of existence has been in question is due to their lack of adaptation. For online sales to rise 800%, it means that they were likely extremely low before.

The increase in digital sales, along with the companies cash flow is likely the two bright spots in the company right now. Game Stop ended the quarter with $735.1 million in cash which is great and can help keep the company afloat while it tries to figure out and innovate ways to stay relevant.

According to George Sherman, CEO, “We believe the actions we are taking to optimize the core operations of our business by increasing efficiencies and creating a frictionless digital ecosystem to serve our customers…while positioning us well for the launch of the next generation of consoles” Clearly the 2020 situation has forced GameStop to accelerate their online plans as evident by the increase of 800% of e-commerce sales as well as their effectiveness as Game Stop “improved fulfillment capabilities driving a 90% fulfilment rate within 24 hours of customers placing an order” Strides like this will truly help Game Stop stay afloat as people want instant gratification and when that comes to online shopping, it’s needs to be delivered same day or next, especially for gaming culture.

Speaking of the next generation launch, GameStop will be part of the Xbox All Access program that allows gamers to pay off their system in instalment and in Canada, EB Games will be the only place to offer the service. Microsoft likely saw results with the pilot project that made them happy enough to continue to expand the service to other countries and this bodes well for GME.

Sherman also added “We believe we are ready, with expanded payment and service options, to handle the expected surge in demand and participate in a very significant way in the console launches later this year” At face value you would think that the expanded payment options are referring to Microsoft All Access but according to GamesBeat who managed to see an internal memo the company is planning to offer other methods of payment in addition to the Xbox program. This is likely in response to the amount of profit the company would see from the All Access program because why else would they go through the trouble unless it makes more fiscal sense. According to the memo the main new method they have planned is by partnering up with third party credit companies to offer payment plans that are structured on a much shorter time frame than the 24 months offered by Xbox All Access.

More bad news that came in the earnings call after the report was released was how GameStop plans to close more stores than originally anticipated at the end of 2019. As of the end of the second quarter, GameStop had closed 388 stores during this year so far, which is up a great deal from the 321 that it closed in all of 2019 with these numbers expected to rise.

The biggest piece of data that shows trouble was that sales were down 26.7 percent from the same quarter last year which is not only troubling at face value but also because gaming has seen a drastic surge during quarantine. If Game Stop can’t increase sales when gaming is at an all time high, then what other hope do they have?