The game retailer suffered a big loss. Photo / Getty Images
GameStop, the video game retailer at the centre of a social-media-driven investment frenzy, said it lost US$215 million (NZ$307m) in the 12 months ended Jan. 30 as it dealt with pandemic-related shutdowns and moved to transform itself into a more online-focused company.
The company's latest results, which fell short of Wall Street's expectations, offered few positives to back up some investors' belief that the struggling retailer is on track to turn its business around and perhaps justify its stock's stunning run from around US$20 a share at the start of the year to north of US$480 by the end of January.
GameStop touted that global e-commerce sales made up 34 per cent of net sales in the fourth quarter compared with 12 per cent in the year-ago quarter. It also noted a 6.5 per cent gain in sales at stores open at least a year, a key retail industry metric.
But there was less encouraging news as well: GameStop announced it would suspend earnings guidance as it focuses on its bid to bring more of its business online. And, in a break with the Wall Street norm, CEO George Sherman didn't take any questions from analysts during a post-earnings release call. Sherman did not address the recent volatility in the company's shares in his remarks.
GameStop shares were little changed in after-hours trading. They fell 6.6 per cent to $181.75 in the regular trading session and are still up about 864 per cent this year.
The Grapevine, Texas, company reported net income of US$80.5 million, or $1.19 per share, for the three months ended Jan. 30. That compares with net income of US$21 million, or 32 cents per share, a year earlier.
The latest results include a nearly US$70 million tax benefit. Adjusted for that and other one-time items, the company's earnings amounted to US$1.34 per share, versus US$1.27 a year earlier.
Revenue fell to US$2.12 billion, from US$2.19 billion. Analysts were expecting adjusted earnings of US$1.35 per share on US$2.21 billion in revenue, according to FactSet. For the full fiscal year, revenue dropped to US$5.09 billion from US$6.47 billion in the prior year.
GameStop has been struggling with declining sales amid the growing popularity of mobile gaming and a shift to downloading video games for PCs and console systems like the Playstation and XBox. All that was happening before the pandemic struck a year ago, accelerating consumers' reliance on online commerce and forcing retailers like GameStop to temporarily close stores.
To adapt, the company has been permanently closing stores and working to grow its e-commerce business.
Earlier this month, GameStop appointed a chief technology officer and hired executives to lead its customer care and e-commerce functions. It also named activist investor Ryan Cohen to lead the company's efforts to drive more of its business online.
Cohen, who co-founded the online pet supply company Chewy, took a huge stake in GameStop before the online frenzy over company shares began in January. He has been seen as an agent of change and someone who knows how to make a traditional business more nimble through technology.
Cohen's arrival helped spark the frenzy over the stock, with some on Reddit's WallStreetBets forum citing Cohen's investment as a sign the company is on the right track.
On Tuesday, GameStop announced it has hired a new chief operating officer, Jenna Owens, who previously worked at Amazon and Google.
GameStop shares vaulted a shocking 1,625 per cent in January as bands of smaller and novice investors communicating on social media hyped up the retailer's stock in hopes of making big returns at the expense of hedge funds betting the shares would head lower.
The stock took a step back in February, shedding nearly 89 per cent. It's been mostly headed higher this month, buoyed in part by the company's recent moves aimed at strengthening its online business.
The company's hyperactive stock price briefly rattled global markets and drew scrutiny from Washington amid questions about whether the broader market was in a bubble and whether a new generation of traders should be able to take full advantage of the free trades available on their phones.
- Associated Press