GameStop earnings do not live up to expectations, but online sales offer hope

GameStop earnings do not live up to expectations, but online sales offer hope

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The gaming retailer is now working to get things right: along with the earnings report, he outlined changes aimed at transforming himself into a customer-driven technology company that delights gamers, ‘his CEO said in a call with investors on Tuesday.

GameStop (GME) reported net sales of $ 2.1 billion in the quarter, down 3% from the same period last year and slightly less than the $ 2.2 billion expected by Wall Street analysts, according to Refinitive. Net income for the quarter was $ 80.5 million or $ 1.19 per diluted share – well below analysts’ forecasts, but a significant improvement from the $ 21 million net income it earned during its fiscal fourth quarter years earned.

For the full year 2020, GameStop achieved a net loss of more than $ 215 million.

One bright spot: the gambling e-commerce’s global e-commerce sales rose 175%, representing 34% of the company’s total net revenue during the quarter. During the same period last year, e-commerce accounted for only 12% of total sales.

This bodes well for the company’s effort to switch to relying more on online sales. This is especially important because the net 693 stores were closed during 2020. It now has 4,816 stores worldwide.

“Our focus in 2021 is on improving our e-commerce and customer experience, increasing our delivery speed, excellent customer service and expanding our catalog,” CEO George Sherman said in a statement. said.

The company’s share initially jumped more than 5% after the release after the release, before turning around to fall more than 10%. And while corporate earnings calls are usually dry events mostly attended by analysts and reporters, GameStop’s Tuesday call reached maximum capacity and allowed additional listeners more than an hour before it began.

The company’s Tuesday earnings report is the first since a trading rage by Reddit in late January took Gamestop’s shares on a rollercoaster ride, exposing a clear divide between investors who bet the struggling trader’s performance will deteriorate and those on ‘ count a return.
The company’s stock fell sharply during the January rally of its wild peaks, but many investors did not stop. GameStop shares closed nearly 7% at $ 181.75 on Tuesday, but were still more than 850% higher than where they started this year.

GameStop’s future plan

The earnings report also comes amid an uproar from the executive at GameStop, probably the work of Ryan Cohen, the billionaire Chewy.com founder who invested heavily in GameStop last year and joined the board in January. Many investors hope that Cohen will help make the toy retailer a formidable competitor in the e-commerce era.
The chief financial officer of GameStop resigns a month after the Reddit trading frenzy
In early February, GameStop appointed Matt Francis, a former engineering leader at Amazon Web Services, as its first chief technology officer to oversee e-commerce and technology features. Weeks later, the company announced the resignation of Chief Financial Officer Jim Bell, saying he would seek a new financial leader with the “capabilities and qualifications to accelerate GameStop’s transformation.”
And on Sunday, the company said its chief client officer, Frank Hamlin, would also leave the firm at the end of March, according to a notice filed with the Securities and Exchange Commission.
The company announced even more leadership changes on Tuesday. It hired Jenna Owens – formerly a director and general manager for distribution and multi-channel processing at Amazon (AMZN) what senior industry roles at Google (GOOGL) and Honeywell (HON) – as chief operating officer from 29 March. Owens could be key to helping the company implement a strategy Sherman outlined Tuesday to update its U.S. distribution network and delivery times.

Neda Pacifico, formerly Chewy’s vice president of e-commerce, becomes GameStop’s new senior vice president of e-commerce. And Ken Suzuki, former vice president of supply chain technology at the online store Zulily, has been named GameStop’s vice president of supply chain systems.

Prior to the report, Wedbush analysts said in a comment to investors last week that they were ‘fairly optimistic’ that the company would be profitable again in 2021, thanks to the launch of popular new game consoles. However, analysts do not currently recommend GameStop’s shares because the trading activity driven by Reddit ‘has caused the share price to rise to levels that are completely disconnected from the fundamentals of the business.’

GameStop has not provided any financial guidance for 2021. But Sherman used Tuesday’s call to outline a number of other strategic initiatives aimed at turning the business around in 2021.

Among the efforts is a plan to establish a ‘customer service industry’ in the US, the CEO said. “We are focused on delivering exceptional customer service levels across all channels, no matter where, when or how our customers do our shopping,” he said. “We achieve this with a technology-driven approach, coupled with our streamlined retail footprint.”

GameStop also wants to expand its product offering beyond video games and consoles by adding computer games, computers, monitors, mobile games and game TVs. Such product offerings could expand the company’s addressable market by more than five times, Sherman said.

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