GameStop Achieves First Quarterly Sales Increase in Two Years

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GameStop Achieves First Quarterly Sales Increase in Two Years


GameStop, the video game retailer whose shares have been the subject of a day-trading frenzy, on Tuesday recorded its first quarterly increase in same-store sales in two years and installed a former Amazon executive at a management position.

Both of these developments have given courage to an army of supporters who say the company can seize the opportunity to transition to e-commerce – even as hedge funds and other investors say GameStop’s stock increase tenfold this year has been detached from reality.

GameStop’s comparable sales were up 6.5 percent year-over-year in the three months to the end of January, compared to a 24.6 percent drop in the third quarter, driven by an increase in sales. online income during the holiday period.

E-commerce sales rose 175%, accounting for 34% of net sales in the fourth quarter from 12% a year earlier.

The retailer has named former Amazon and Google executive Jenna Owens as the new chief operating officer as part of a larger reshuffle of its management team as it seeks to stem a drop in prices. sales for years.

GameStop has previously brought in Ryan Cohen, its largest shareholder and co-founder of Chewy.com, to lead an expansion of its e-commerce business.

Optimism about the turnaround effort among followers of the Reddit WallStreetBets bulletin board helped spark GameStop’s great stock rally earlier this year, culminating in a short squeeze that cost hedge funds billions of dollars and is the subject of congressional hearings.

Yet the latest quarterly results show that a business continues to shrink. Net sales fell to $ 2.12 billion from $ 2.19 billion in the last year quarter, hit by coronavirus-related store closings in Europe and a 12% reduction in store base from GameStop. Analysts were looking for $ 2.21 billion in net sales.

Net profit was $ 80.5 million, up from $ 21 million a year ago. GameStop earned $ 1.34 per share on an adjusted basis, a penny lower than analysts forecast.

Camilla Yanushevsky, analyst at CFRA Research, called the results disappointing, noting that annual revenues fell again by more than a fifth despite three rounds of stimulus checks sent to U.S. consumers and a gaming boom during the pandemic. The decline “emphasizes how [GameStop’s] the business model is with the age-old trends that we are seeing in consumer behavior, ”she said.

GameStop’s sales have plummeted in recent years as it has struggled to adjust as digital downloads and free online games have taken over the gaming world and mall traffic has slowed down as retailers consumers were connecting.

But George Sherman, chief executive, said the company was “on a good start” this year, citing a 23% increase in same-store sales in February amid strong global demand for gaming hardware.

“Our goal in 2021 will be to improve our e-commerce and customer experience, increase our delivery speed, provide superior customer service and expand our catalog,” he said.

GameStop shares hit an all-time high of $ 483 during Reddit’s trading frenzy in January and, before the results were released on Tuesday, were up 865% since the start of 2021. In after-hours trading, they fell by more than 10%.

GameStop said in a securities filing that it is assessing whether to sell additional shares this year, primarily to fund its transformation.

Analysts and investors had anticipated that GameStop could profit from the sharp rise in its shares by selling shares. It already announced in December its intention to sell up to $ 100 million in shares via a market offer.

Some WallStreetBets users said they were not discouraged by the after-hours selling of the stock on Tuesday and called on other investors to hold onto their shares. Some blamed the drop on traders who expected more from GameStop’s earnings call, in which executives did not respond to questions from analysts. Other commentators were optimistic about the company’s plans for 2021.

Earlier today, GameStop said Frank Hamlin, its chief clientele, would step down at the end of March, a second senior executive departure this month. He previously announced that Jim Bell, CFO, would resign.

GameStop said it continues to “actively seek out” senior talent with experience in e-commerce, retail and technology to help transform the business.

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