Earnings Results: GameStop stock soars 35% on surprise quarterly profit, higher sales
GameStop Corp. stock jumped 35% in the extended session Tuesday after the specialty retailer reported a surprise quarterly profit and sales that were above Wall Street expectations.
The retailer is “aggressively focused on year-over-year profitability improvement while still pursuing pragmatic long-term growth,” Chief Executive Matt Furlong said at the company’s call after the results.
earned $48.2 million, or 16 cents a share, in the fourth quarter, contrasting with a loss of $147.5 million, or 49 cents a share, in the year-ago quarter.
Sales dropped slightly to $2.23 billion, from $2.25 billion a year ago, in the prior year’s fourth quarter.
Analysts polled by FactSet expected the videogame retailer to report an adjusted loss of 13 cents a share on sales of $2.18 billion.
GameStop said it trimmed its inventory to $682.9 million at the close of the quarter, compared with $915 million at the close of the fourth quarter of 2022.
That reflected its “ongoing focus on maintaining a healthy inventory position,” the company said.
GameStop said it completed most of its upgrades related to infrastructure, systems, shipping capabilities, and online and mobile platforms.
On the call with analysts after the results, Furlong said that the company is taking steps this fiscal year to improve efficiency and reach profitability goals.
Those include continuing to cut costs, including in Europe, leveraging GameStop’s “strengthened financial position” to continue to improve terms from suppliers, and getting its full allocation of consoles to meet demand, he said.
Building “a stronger presence” in high-margin categories such as collectibles and toys, where the company is also seeing “pockets of growth,” is also on the table, Furlong said.
“GameStop is a much healthier business today than it was at the start of 2021,” the CEO said.
GameStop stock ended the regular trading day up 4.6%, and has gained about 12% in the four days since it closed at a two-year low.
GameStop has reported wider-than-expected losses in three of the past four quarters, but the stock has gained the day after each of the past four reports, by an average of 8.2%, according to FactSet data.
The onetime meme stock has lost about 13% the past three months, while the S&P 500 index
has gained 2.6%.