GameStop Corp. (NYSE: GME) Q3 2020 Earnings Highlights
George Sherman, CEO
“…Our purpose is straightforward. We’re positioning GameStop to be the main world omni-channel retailer for all issues gaming and leisure. We’re inspired by our profitable efforts in 2020 to start class and product extensions that enhance our addressable market in addition to by our buyer’s early response to an expanded services and products providing. On the forefront of this technique is a digital first method centered on delivering a best-in-class ecommerce expertise, together with an optimized retail footprint.
Along with enhanced success choices, they supply our prospects with probably the most complete set of video games and leisure merchandise and occasions, wherever, nevertheless and each time they need them. The present console primarily based video video games merchandise are an vital component of our technique over the subsequent few years, and we realized the very profitable launch of the subsequent era merchandise in November, driving 16.5% development in comparable retailer gross sales.
This was the primary constructive comparable retailer gross sales month in practically two years, regardless of being closed on Thanksgiving Day in North America, and the continued adverse influence of COVID-19, which noticed the closure of the overwhelming majority of our European storefronts for your complete month. Along with the enchantment of subsequent era of consoles, these outcomes additionally replicate the numerous enhancements we now have already made to the efficiency of our omni-channel platform, as world on-line gross sales within the month of November grew 352%.
In step with these early outcomes, we anticipate to generate robust gross sales development and profitability within the closing quarter of the 12 months. Let’s assessment a few of the extra highlights for the third quarter. Jim will share a few of the particular particulars of the quarter, however broadly talking, our world retailer fleet noticed on and off intervals of retailer closure or restricted entry to prospects, notably as COVID-19 instances accelerated all over the world in October after which by means of November.
We imagine the pandemic and importantly, the despair of retail buyer mobility, lowered our comparable gross sales within the third quarter by 3 to five proportion factors. Pivoting to our strategic accomplishments within the quarter, we proceed to optimize our core enterprise by bettering effectivity and effectiveness throughout the group, resulting in a discount in SG&A bills of practically $115 million for the quarter, bringing our complete for the 12 months to over $315 million versus 2019 roughly two-thirds of which we view as everlasting.
We proceed to work shortly to optimize our omni-channel capabilities by means of the transformation of our bodily retailer presence. Via the third quarter, we now have closed virtually 800 shops worldwide because the starting of 2019, representing each underperforming places and de-densification in sure commerce areas. We anticipate these closures to create a extra worthwhile footprint.
Within the U.S., we proceed to see robust gross sales and revenue transferred to neighboring places and e-commerce, an vital level in supporting the continued optimization of our retailer fleet. Client affinity for our frequently bettering e-commerce expertise within the ease of purchasing and same-day supply of our omni-channel success is growing effectivity throughout our retailer footprint. By the top of the fiscal 12 months, we are going to shut over 1,000 shops since we started this optimization journey in the midst of 2019, all with little to no capital outlay.
Given the power of our e-commerce gross sales and omni-channel capabilities, which I’ll touch upon momentarily, we now see the chance to shut extra shops going ahead in 2021 and 2022 as we optimize the profitability of omni-channel structure. General, our purpose is to serve our prospects wherever, each time and nevertheless they select to buy.
We proceed to enhance our stability sheet. We once more enhance working capital administration with a 33% discount in stock and a 38% decline in accounts payable, ending the interval was $603 million of money and restricted money about $300 million greater than the prior 12 months third quarter.
Lastly, on account of the continued power of our stability sheet, we additional improve our capital construction with the announcement for the voluntary early redemption of $125 million for roughly 63% of our excellent notes due in 2021. As you understand, we stay very dedicated to our efforts to construct a frictionless digital first omni-channel ecosystem in our prospects are responding, considerably altering the way in which they store with us.
Our give attention to buyer centricity and the very best finish to finish buyer expertise has led to latest materials positive aspects in our e-commerce enterprise, and we anticipate to construct on this success reinforcing the core focus of our go for technique. Within the third quarter, we delivered a 257% enhance in e-commerce gross sales versus the prior 12 months, fueled by our elevated omni-channel capabilities. E-commerce penetration continues to develop and represents practically 25% of complete gross sales this 12 months, up from a low single digit proportion traditionally.
We’re additionally leveraging our expanded success capabilities akin to curbside pickup, purchase on-line choose up in retailer, ship and retailer. And within the third quarter, we rolled out same-day supply for on-line transactions to 2000 places, and now have that choice obtainable in all of our U.S. shops. Given a comparatively excessive common transaction dimension, we are able to profitably associate with final mile supply providers to supply prospects with same-day supply.
Our new cellular app, which launched totally in October is rather more participating with the earlier model and gives newly obtainable performance and dramatically improved buyer expertise. The app is customizable permits prospects to personalize options, choose same-day supply choices and browse a curated deal hub. With extra individuals downloading and utilizing the app on a weekly foundation and interesting with it for longer intervals of time, we’ve seen a big enhance in engagement inside the transactions, a 30% enhance in conversion.
With the elevated utilization, e-commerce gross sales originating from the app have now doubled. We’re more than happy with the preliminary efficiency and look ahead to rolling out extra options such because the gamer information feed and a complete, straightforward to make use of digital pockets in early 2021.Going ahead, you will notice us leverage our GameStop ecosystem of shops, e-commerce and our app to ship and enhanced 360 diploma expertise for customers with services and products which are extra related to how they join and play in gadgets at present and sooner or later, all with a give attention to driving buyer lifetime worth.
These efforts have already resulted in and we imagine will proceed to result in increased conversion, basket dimension, frequency of buy, in addition to a brand new buyer acquisition for our energy up loyalty program. As you admire these are very encouraging metrics. The progress we made through the quarter on our strategic initiatives, regardless of the COVID-19 backdrop, largely completes our optimization and stabilization phases of our technique, which we’ve been engaged on for during the last 15 months and positions us for the subsequent section transformation.