[wasteland 3 gamestop]GameStop stores still appear to be empty despite Reddit-fueled rally

Tag: 2021-07-22 14:00

  According to new research out of location data analysis firm Placer.ai, weekly store traffic for GameStop declined at an accelerating rate in January.

  MYLES UDLAND: All right, welcome back to “Yahoo Finance Live.” Let’s talk a bit more about the GameStop story. And Brian Sozzi, touch a little bit of that fundamental discussion we had earlier about the health of their business. And, again, the bull case that kind of started this whole saga was about the need to digitize the business, to lean into its growing e-commerce operations. But that doesn’t mean that they haven’t yet, in the parlance of executive management, rightsized their physical footprint.

  BRIAN SOZZI: No, this is still a company that’s operating over 5,000 stores around the world, which is really borderline ludicrous in this age of digital shopping, especially off the quarter EPS and what CEO Carol Tome just told us about the sustainability of those online games. But anyway, I have an article right now on Yahoo Finance looking at the store traffic in the month of January. And this data comes compliments of Placer.ai. Not only has traffic worsened each week of January– I mean, for the week ended January 18, traffic in these stores were down 23%.

  So it indicates that despite all this frenzy, this is not a fast food situation. Many times in fast food, they release a new item, people bum rush the stores, they buy all the items, they take Instagram photos. That doesn’t appear to be happening right now with GameStop. Because the stores look, at least by judging on this data, like barren wasteland still. Now, Myles, you did bring up a very good point earlier on, perhaps these people are buying consoles and games online. And that’s all fine and good, but when you still operate over 5,000 stores around the world with all those lease obligations and all those employee costs, you’d better be selling some video games and consoles out of these stores.

  MYLES UDLAND: Yeah. And you know what, I think that GameStop management is probably pleased to some extent to see this thing cooling off. The stock is off about 55% right now, back to $90 a share. And I think that conversation, Brian, about what to do with the business, with activists joining the board, with earnings coming up in a few weeks, that can go back to the story here. Because there’s certainly an interesting business case here, but a few things need to change before we’re really talking about GameStop being durably an $8 or a $10 billion business.