SAN RAFAEL, CA – DECEMBER 8: Customers enter the GameStop Store on December 08, 2021 in San Rafael, CA. GameStop, the video game retailer, will announce third-quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images)
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Jim Stop On Wednesday, he said quarterly sales slumped and losses widened, as they collapsed through liquidity and bloated inventory.
As the video game retailer revealed new partnership With FTX cipher exchange.
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The company’s shares rose about 10% in after-hours trading.
In the second fiscal quarter ending July 30, the company’s total sales fell to $1.14 billion from $1.18 billion in the same period last year. Its loss widened to $108.7 million, or 36 cents per share, compared to a loss of $61.6 million, or 21 cents, the previous year.
GameStop’s results can’t be compared to estimates because very few analysts cover the company. It has not provided a financial outlook and has not provided one since the beginning of the pandemic.
The traditional retailer is trying to adapt its business to the digital world. It has been given new leadership, including Chairman Ryan Cohen, founder of rubbery A former activist investor in bed bath behindand CEO Matt Furlong, A Amazon veteran. New ways to earn money have also been sought, including non-fungible tokens.
But the company struggled to turn a profit, leading it to cut costs and change leadership. Last month, it fired Chief Financial Officer Mike Ricupero and Layoffs across departments. The head of the accounting department, Diana Jagah, has risen to the position of the company’s new chief financial officer.
Furlong urged patience on a call to investors on Wednesday, saying GameStop must go through major transformations to keep up with customers.
“Our path to becoming a more diversified, technology-centric company is clearly a risky path and it will take time,” he said. “That’s what he said, we think GameStop is a much stronger company than it was 18 months ago.”
GameStop’s new initiatives came at a high cost. It had $908.9 million in cash and cash equivalents at the end of the quarter — just over half of what it had at the end of the period last year.
Inventory swelled to $734.8 million at the end of the quarter. That’s up from $596.4 million at the end of the second quarter of the previous year. The company said in a statement that it intentionally assembled the merchandise to keep pace with customer demand and deal with supply chain challenges.
On the call, Furlong said the company had to spend money to modernize its business after years of underinvestment. Among its steps, it has hired more than 600 talent in fields like blockchain while reducing shipping times, so customers can receive purchases within one to three days.
He said the company is now focusing on new priorities: becoming profitable, launching proprietary products and investing in its stores. He said it cuts costs, too. Expenses are down 14% from the first quarter of the year, including some cutbacks that came from layoffs.
“We will maintain a strong focus on cost containment and continue to foster an ownership mentality across the organization,” he said.
With overall sales declining, he noted the growth of new business. Jim Stop It launched a marketplace for NFT in July, that Open to the public for beta testing. It allows users to connect their digital asset wallets, including the recently launched GameStop Wallet, so they can buy, sell and trade NFTs in exchange for virtual goods.
Sales attributable to collectibles increased from $177.2 million in the second quarter of the prior year to $223.2 million most recently.
NFTs trade on FTX, the retailer’s new partner. “In addition to collaborating with FTX on new e-commerce and online marketing initiatives, GameStop will begin carrying FTX gift cards at select stores,” GameStop said in a statement.
The billionaire founded FTX Former Wall Street Trader Sam Bankman Fried30. It has become the lender of last resort to crypto companies that have suffered due to a sharp decline in assets since late last year.
The agreement with FTX seems to play GameStop as meme stock.
The company’s shares experienced sharp fluctuations in value. Over the past year, the shares have swung from $19.39 to $63.92. The company’s stock is down about 36% so far this year, bringing the company’s value to $7.31 billion.
Even with the company focusing more on e-commerce, Furlong said stores remain an important way to connect with customers and fulfill online orders.
GameStop has introduced a new compensation model for US store leaders, he said. Each store manager can have $21,000 in inventory, which is spread out over three years. They can also earn additional salaries through company stock on a quarterly basis, depending on their performance.
It also raises the hourly wages of some store employees, but he did not share the exact wage.
Read GameStop Earnings Statement over here.
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