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Wall Street analysts expect GameStop to report fourth-quarter sales of $ 2.16 billion
Michael M. Santiago / Getty Biller
GameStop
on Thursday reported a surprise loss for its fiscal fourth quarter. Shares fell in late trading, although net sales performed better than expected.
GameStop (ticker: GME) reported a adjusted net loss of $ 141 million, or $ 1.86 per share, compared to Wall Street’s consensus estimate for earnings of 85 cents per share, according to FactSet. Net sales of $ 2.25 billion were ahead of expectations for $ 2.16 billion.
The stock is down 9.6% in after-hours trading. The company’s stock is down about 56% from a year ago as investors waited for signs of a wider turnaround for video game traders.
In a new dossier with the Securities and Exchange Commission, the company said it had focused on transforming GameStop into a “customer-obsessed technology company to excite gamers.”
“GameStop is on a strategic path to take full advantage of our unique position and brand in the game,” the company said. “Our strategic plan is designed to optimize our core business and at the same time pursue strategic initiatives to transform GameStop for the future by expanding our addressable market and product offerings to drive growth in the gaming and entertainment industry.”
The annual filing describes initiatives such as improving e-commerce efforts, its app, and website. GameStop has invested in expanding its fulfillment and customer care operations, as well as offering more computer and consumer electronics accessories.
GameStop on Thursday also released an update on its dive into the non-fungal token space. It now plans to launch its NFT marketplace by the end of the second quarter of fiscal 2022.
Shares have been down about 41% for years to date as meme trading has evolved with wider market volatility and rising interest rates.
The firm held a short conference call with analysts to discuss earnings but did not take any questions, a pattern of the four quarters continued. During this stretch, the company also refused to provide financial guidance.
In a recent letter to
Bett Bath & Beyond
‘s
(BBBY) Board of Directors, President Ryan Cohen said he prefers a management approach that focuses on execution rather than reassuring Wall Street and television personalities.
Cohen joined the company’s board of directors in January 2021 as an activist investor, which helped the GameStop stock reach its parabolic current, destroying hedge funds against it. Cohen became president in June. The company has added executives with e-commerce expertise, particularly naming
Amazon
alum Matt Furlong and the role of CEO.
“We have learned from the mistakes of the last decade how GameStop has not adapted to the future of the game,” Furlong said during Thursday’s earnings call. “It’s important to emphasize that GameStop has become such a cyclical business and so capital hungry that we’ve had to rebuild it from within. We’ve also had to change how we assess revenue opportunities by starting to push the new boundaries of the game, rather than of running.
Analysts like Michael Pachter of Wedbush have said the company has not provided a plan to turn things around significantly. Looking ahead to the results, the tenant said the Barron that he expected the CEO of the company to once again read prepared comments and ask no questions.
“No leadership, no meaningful revelation about the strategy,” he added. “They will be throwing a lot around ‘blockchain’ and ‘NFT’, maybe some ‘metaverse’ references being introduced.
It is not just the tenants who question the firm’s strategy. At the South by Southwest conference in Austin, Texas, former GameStop director Reggie Fils-Aime told Bloomberg Emily Chang that he was rejected as he tried to share his expertise as former Nintendo of America president with Cohen and his associates.
“There was no articulated strategy,” said Fils-Aime. “You can go to the GameStop website, try to find a strategy. There is no articulated strategy. The leadership says, ‘Well, we do not want to articulate our strategy because they do not want anyone to steal our strategy.’
The line made the SXSW audience laugh.
“I come from the business perspective that you need to articulate your strategy for all of your key components,” he said. “You need to communicate your business partners; your bidders; your employees; your shareholders. And the three public councils I participate in communicate all of their strategy.
A GameStop representative did not return a request for comment on Fils-Aime’s comments.
GameStop shares tend to be volatile following quarterly results, so the initial after-hours movement in Friday trading could disappear. As Cohen said during his shareholder address in June, investors may hold back.
Write to Connor Smith at connor.smith@barrons.com
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