Weaker Profit and Sales, but February Rebounds
GameStop said it earned $1.34 per share for its Q4 to end-January, which is slightly lower than the $1.35 expected from the market analysts. Business revenues came in at $2.12 billion, which missed Wall Street estimates of $2.21 billion and is lower than $2.19 billion reported a year ago.
Q4 same-store sales, which makes the bulk of annual earnings, rose 6.5%. GameStop announced earlier it will accelerate its shift to ecommerce with the company now reporting its ecommerce sales exploded 175% last quarter and accounted for over a third of its sales in Q4.
“The past year also saw us take steps to accelerate our de-densification efforts and streamline our store footprint, leverage our retail locations to provide same-day delivery and curbside pickups, and continue to enhance our suite of E-Commerce platforms,” George Sherman, the chief executive officer of the company, said in a press release.
The video game business also didn’t provide forward-looking guidance, but Sherman said that February comparable store sales soared as much as 23% on the back of the strong hardware sales worldwide
“As we look ahead, we are excited by the opportunities that are in front of us as we begin prioritizing long-term digital and E-Commerce initiatives while continuing to execute on our core business during this emerging console cycle,” he added.
GameStop stock was at the center of the drama that started in late January when a group of retail investors, centered around Reddit’s “WallStreetBets” subforum, started aggressively buying shares of businesses that were previously targeted by short-selling hedge funds.
As a result, GameStop stock exploded almost 2,400% in less than three weeks in January on strong buying activity, which also prompted an investigation by the Department of Justice (DoJ). In last night’s press release, the video game business admitted it was considering selling additional shares to capitalize on the rise in the stock price.
In 2020, Chewy co-founder Ryan Cohen was added to GameStop’s board to accelerate the ecommerce shift. In the meantime, Cohen has been credited with numerous changes at the top of the company, including the expected departure of the current CFO Jim Bell on March 26. A report from Business Insider noted that Bell was pushed out of the company by Cohen as he looks to speed up the transformation process.
In this context, GameStop announced last night it has appointed Jenna Owens to the role of Chief Operating Officer (COO). She was previously at Amazon, where she acted as a director and general manager for Distribution and Multi-Channel Fulfillment, according to the press release.
The interest in the earnings conference call was so high that, at one point, the capacity was full. The company refused to take questions from analysts, which resulted in disappointment from the lack of detail provided during the conference call.
GameStop stock is trading over 12% in the red in the pre-market trading session today.
Video game company GameStop announced weaker-than-expected Q4 results that sent shares of the retailing business lower in pre-open Wednesday. The company also presented a new COO Jenna Owens, who joins from ecommerce business titan Amazon.
About the Author
An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.