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SAN RAFAEL, CALIFORNIA – DECEMBER 8: Customers enter the GameStop store in San Rafael, CA on December 8, 2021. Video game retailer GameStop will report third quarter earnings after closing bells today. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images News | Getty Images
game stop said Wednesday that quarterly sales fell and losses widened.
The video game retailer also revealed new partnership On the crypto exchange FTX.
The company’s shares rose about 10% in after-hours trading.
Revenue for the second quarter ended July 30 was $1.14 billion, down from $1.18 billion a year ago. That loss widened to $108.7 million, or 36 cents per share, compared to his loss of $61.6 million, or 21 cents, a year earlier.
There are too few analysts covering the company to compare GameStop’s results with estimates. It does not provide a financial outlook and has not since the start of the pandemic.
Brick-and-mortar retailers are adapting their businesses to the digital world. It gained new leadership, including founder and chairman Ryan Cohen. crunchy and former activist investor Bed Bath & Beyondand CEO Matt Furlong, Amazon veteran. We are also looking at new ways to make money, including non-fungible tokens.
However, the company has struggled to grow its profits, leading to cost reductions and a leadership refresh. Last month, it fired its chief financial officer, Mike Lecupero. Employees were laid off across departments. Accounting director Diana Jajeh has been appointed as the company’s new CFO.
Furlong urged patience in a call to investors Wednesday, saying GameStop will have to go through a significant transformation to keep up with customers.
“Our path to becoming a more diversified, tech-focused business is clearly a risky and time-consuming one,” he said. I think we are a much stronger business than we were a month ago.
GameStop’s new initiative cost a lot of money. Cash and cash equivalents ended the quarter at $908.9 million, just over half of the year-ago quarter.
Inventory ballooned to $734.8 million at the end of the quarter. This is up from his $596.4 million at the end of the second quarter last year. In a release, the company said it intentionally increased its product line to keep up with customer demand and address supply chain challenges.
Furlong said in a call that the company had to use the money to modernize its business after years of underinvestment. We have hired more than 600 people with the ability to reduce delivery times and enable customers to purchase in 1-3 days.
Now the company is focusing on new priorities, he said. Making money, launching unique products, investing in stores. He said the cost was also reduced. Expenses were down 14% from the first quarter, including some cuts from headcount reductions.
We will continue to focus on cost containment and continue to promote a spirit of ownership throughout our organization, he said.
He pointed to new business growth as overall sales declined.game stop Launched the NFT Marketplace in July, this is Published for beta testingIt allows users to connect their own digital asset wallets, including the recently launched GameStop wallet, so they can buy, sell, and exchange NFTs for virtual goods.
Sales attributed to collectibles increased to $223.2 million in the most recent quarter, up from $177.2 million in the year-ago quarter.
NFTs will be traded on the retailer’s new partner, FTX. “In addition to working with FTX on new e-commerce and online marketing initiatives, GameStop will begin accepting FTX gift cards at select stores,” GameStop said in a release.
FTX was founded by a billionaire Former Wall Street Trader Sam Bankman-Fried30. He became the lender of last resort to a struggling crypto firm as his assets plummeted since the end of last year.
The deal with FTX seems to affect GameStop’s status as a meme stock.
The value of the company’s stock fluctuates rapidly. Over the past year, the stock has jumped from $19.39 to $63.92. The company’s stock has fallen about 36% so far this year, valuing him at $7.31 billion.
Even as the company pivots more to e-commerce, Furlong said stores will remain an important way to connect with customers and fulfill online orders.
GameStop has rolled out a new rewards model for US store leaders, he said. Each store leader gets his $21,000 in inventory that vests over three years. You can also receive an additional salary through company stock on a quarterly basis, depending on your performance.
The company has also raised hourly wages for some store workers, but did not disclose specific wages.
Read GameStop’s Earnings Release here.
