GameStop Corp, the video game retailer at the centre of this year’s “meme stock” trading frenzy, beat analysts’ estimates for quarterly revenue on Wednesday, as vaccinations encouraged people to return to its stores.
Net sales rose to $1.18 billion in the second quarter ended July 31 from $942 million a year earlier, above the average estimate of $1.12 billion by four analysts, according to IBES data from Refinitiv.
The results come as investors closely track chairman and top shareholder Ryan Cohen’s efforts to reinvent the company by focusing more on e-commerce while also trying to rejuvenate the physical stores after a year of pandemic-related closures.
Whether Cohen, along with a new CEO who joined in June, will succeed is still unclear and top executives have been largely mum in laying out exact details related to a specific strategy. Cohen had said in June: “You won’t find us talking a big game, making a bunch of lofty promises, or telegraphing our strategy to the competition.”
This was also the first quarter for GameStop CEO Matt Furlong who joined in June and replaced George Sherman.
The company’s shares dipped 2.6% in after-hours trading after closing the regular session at $199.16, marking a 1,052.46% increase so far this year.
GameStop reported a net loss of $61.6 million compared with a loss of $111.3 million in the year-ago quarter. The company also reported $378.9 million in expenses, up from $348.2 in the year ago quarter. “Revenues were just slightly higher than expected and operating expenses were meaningfully higher, so losses were wider than we expected,” Wedbush analyst Michael Pachter wrote.
At the annual meeting in June, Cohen emphasized the company’s focus on “long-term growth” as it takes on both big-box retailers and works to revive its own network of stores.
Cohen, the billionaire co-founder and former chief executive of online pet supplies retailer Chewy Inc, has hired several Amazon.com Inc veterans and raised funds for his turnaround efforts through a share sale while focusing on improving the stores’ business by adding higher-margin products and better inventory.
This is GameStop’s second straight quarterly revenue beat after having missed estimates for more than two years as the company struggled with gamers shunning physical discs to download and play online, a trend that accelerated during the pandemic.
Adjusted loss per share was 76 cents, while analysts had expected a 67-cent loss, according to Refinitiv IBES data based on the work of four analysts.
The company ended the quarter with $1.78 billion in cash and with no long-term debt other than a $47.5 million low-interest loan associated with the French government’s pandemic response.
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