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GameStop (GME) earnings Q3 2022

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A screen displays the emblem and trading information for GameStop on the ground of the Recent York Stock Exchange (NYSE) March 29, 2022.

Brendan McDermid | Reuters

GameStop said Wednesday its fiscal third quarter sales declined and its money pile sharply dwindled, because the brick-and-mortar retailer has been working to expand its digital presence.

Within the third fiscal quarter, which ended Oct. 29, GameStop’s total sales were roughly $1.2 billion, down from $1.3 billion in the identical period last yr. The corporate’s money and money equivalents fell to just about $804 million from roughly $1.4 billion a yr earlier.

Shares of the corporate rose nearly 3% in off-hours trading Wednesday, after declining 4.8% in the course of the regular session.

GameStop has been working to change into profitable and revamp its brick-and-mortar retail business, after what executives have said were years of underinvestment. In recent months the retailer has modified up leadership and concentrate on initiatives to further entrench it within the digital world. 

GameStop’s CEO Matthew Furlong said on a call with investors Wednesday the corporate “is attempting to perform something unprecedented in retail … searching for to rework a legacy business once on the point of bankruptcy.”

The corporate reported a net lack of nearly $95 million, a slight improvement from a few lack of about $105 million in the identical period last yr.

Furlong added the corporate has been working to make its balance sheet stronger, and cushion its money position, in hopes of putting it able to explore acquisitions of complimentary businesses. The CEO added the corporate would proceed to chop costs, with layoffs occurring within the second half of 2022.

GameStop’s results can’t be compared with estimates because too few analysts cover the corporate. As in earlier past quarters because the starting of the pandemic, GameStop didn’t provide a financial outlook.

The retailer continued to carry plenty of inventory on its balance sheet: $1.13 billion at the top of the quarter, although barely down from $1.14 billion at the identical time last yr. Like other retailers, GameStop has been coping with a backlog of inventory after intentionally bulking up on merchandise to contend with higher customer demand and provide chain issues. 

GameStop strengthened its inventory position earlier this yr by divesting a small portion of its merchandise in categories with soft demand, Furlong said Wednesday.

The corporate, which has change into often known as a meme stock, has been adjusting its business to a digital world. It tapped latest leadership, including CEO Matt Furlong, an Amazon veteran, and Chewy founder and activist investor Ryan Cohen as board chair. 

Still, the brick-and-mortar retailer has struggled to drive profits lately, resulting in cost cuts and a shake-up in leadership. Earlier this yr, it fired chief financial officer Mike Recupero and laid off employees. 

The corporate also launched an NFT marketplace in July, which has been open to the general public for beta testing. The marketplace allows users to attach their very own digital asset wallets, including the recently launched GameStop Wallet, in order that they can purchase, sell and trade NFTs for virtual goods. 

GameStop said in a news release Wednesday its sales attributable to latest and expanded brand relationships “were strong within the quarter, while sales within the collectibles category remained strong in a year-to-date basis.”

GameStop said last month that it had ended its partnership with FTX, after the crypto exchange filed for bankruptcy. Just months earlier, GameStop had announced the partnership with the aim of introducing its customers to the crypto world and marketplace, and had also began carrying FTX gift cards in a few of its stores.

In a tweet, the corporate said it could be providing full refunds to impacted customers.

Furlong said Wednesday the corporate “was fortunate its exposure to digital assets has been very modest.” FTX’s bankruptcy filing has sent ripples through the crypto market. The CEO didn’t provide any updates regarding its recently ended partnership with FTX.

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