UPDATE: June 10, 2020: In a first quarter defined by the COVID-19 crisis, GameStop’s e-commerce revenue rose 519% in Q1, with digital sales up a whopping 1000% in the first six weeks after closing its stores in response to the pandemic and closure orders. At the same time, the retailer’s comparable sales fell 30%, with the closures accounting for a little less than half of that decline, according to a company release.

Dive Brief:

• After reporting an initial sales bump in March, GameStop now estimates first-quarter global sales declines of 33% to 35% compared to last year, which brought in $1.5 billion in Q1, according to a press release.
• Net loss could be between $162 million and $172 million compared to about $6.8 million in the year-ago period.
• GameStop also announced an exchange offer for $414.6 million in senior notes due next year, which can be traded by current holders for new notes due in 2023 at a higher interest rate.

Dive Insight:

In March, GameStop CFO Jim Bell said comp sales rose 2% in the early weeks of that month, something he and the company attributed to students and workers stuck at home, in need of entertainment and home technology options, as well as a curbside, contactless model the company rolled out.

The numbers now look much more bleak, with top-line and comparable sales down by around a third. All told, about three-fourths of GameStop's international stores closed starting in March, and the retailer closed all of its 3,500-plus U.S. stores by March 22 (after the company, according to a Vice report, initially kept its stores open). In Australia, where GameStop was allowed to stay open, comp sales were up 35%.

"Our Buy Online Pickup in Store capabilities enabled many of our stores to safely open for contactless curbside pickup," CEO George Sherman said a statement Thursday. "Importantly, the U.S.-based stores conducting this limited curbside offering were able to meet or exceed their sales plans during the second half of the quarter which is a true testament to our ability to fully capitalize on both our omni-channel capabilities and our leadership position in gaming."

But the company also acknowledges the toll the pandemic has taken on its business. "The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains and created significant volatility and disruption of financial markets," GameStop said in new disclosures added to its securities filings. "The COVID-19 pandemic has had and is expected to continue to have an adverse effect on our business and financial performance."

GameStop also listed civil unrest as well as economic and political uncertainty as potential risks.

All of this new uncertainty follows a year of severe declines for GameStop, as gamers awaited new hardware due out in 2020. The retailer has been downgraded this year, with Moody's analysts citing competitive threats and changes to entire gaming industry, such as digitization.

With its debt rating descending and losses mounting, a debt exchange buys GameStop time on its turnaround. Its near-term performance will likely be determined by new game titles, hardware releases and the broader economy. Long-term, GameStop's survival will likely depend on its ability to adapt to the digitization of its core product.