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Reported widening losses in the last quarter. While the video game retailer provided some updates on the goals of the new leadership team, management declined to provide formal financial goals.
GameStop (stock ticker: GME) reported an adjusted net loss for the third quarter of the fiscal year of $105.4 million, or $1.39 per share. Sales were up 29% year over year to $1.3 billion. The remaining four analysts who provided estimates for FactSet had expected an adjusted net loss of 52 cents per share on sales of $1.19 billion.
CEO Matt Furlong said during the company conference call that the company is focused on expanding GameStop selection, accelerating delivery speeds, and improving customer experience. He added that GameStop has made long-term investments in infrastructure, talent, and technology. He noted that the company will prioritize revenue growth and market leadership over short-term margins.
“Our focus on the top line stems from the significant experience of our leadership team in e-commerce, and we believe revenue growth is critical,” Furlong said. “We believe revenue growth will translate into volume and market leadership. From there, volume and market leadership will translate into greater free cash flow over time.”
Furlong confirmed that GameStop is exploring opportunities in blockchain technology, non-fungible tokens, and Web 3.0 games, but did not offer specific plans. The CEO also declined to provide formal guidance or take questions from analysts.
Inventories in the first quarter were $1.14 billion, up from $861 million at the end of the third quarter of the previous fiscal year. The company said this reflects GameStop’s focus on front-loading investments to meet growing demand and mitigate supply chain issues.
GameStop said it has set up offices in Seattle and Boston. Both cities have been dubbed technology hubs with well-established talent markets.
GameStop has also secured an asset-based lending facility of $500 million on enhanced terms. The company ended the fiscal quarter in cash and cash equivalents of $1.41 billion and no debt, apart from $46.2 million related to a low-interest, unsecured term loan.
GameStop stock fell 4.3% to $166.16 in premarket trading Thursday after the earnings announcement. For the stock average, such a move may be a signal of a negative reaction from traders. But with GameStop, it’s too early to draw conclusions. Following the recent earnings reports, stocks changed dramatically the following trading day.
The company’s stock exploded in January when individual investors on social media sites like Reddit piled into the stock. Many of these users believe that short sellers betting on the company’s decline have overextended themselves.
Co-founder Ryan Cohen, who is now GameStop’s board chair, helped spark the viral rise when he and two colleagues joined the GameStop board of directors with transformation aspirations in mind. Under Cohen’s command, Chewy managed to take over
In the pet supply business partly because of their expertise in their respective field, as well as fast shipping and customer relationship efforts.
Since then, the company has attracted executives from major retail and e-commerce companies, most notably Furlong from Amazon. It has also taken steps to expand its fulfillment and customer service efforts.
The transition from physical game discs to digital downloads will continue to burden GameStop’s prospects. Analysts have been disappointed by the company’s lack of communication about its specific goals and plans for the turnaround, but several of the company’s retail investors have indicated that Cohen has been vague about his plans to keep competitors off his tail.
Write to Connor Smith at email@example.com