GameStop Focuses On Digital Future As It Reports $157 Million Quarterly Loss
Gaming retailer GameStop’s net loss more than doubled in the first quarter, compared to a year ago, but CEO Matt Furlong says the company is winning in the metrics that matter most.
Primary among those, Furlong said is top-line growth. GameStop’s net sales were $1.378 billion for the quarter, up from $1.277 billion in the first quarter of fiscal year 2022.
Furlong emphasized, as he has in previous earnings calls, that the company considers long-term revenue growth the best indicator that its turnaround strategy is working, and main way stockholders should measure the company’s performance.
The quarter’s net loss was $157.9 million, 0r $2.08 per share, compared to $66.8 million or $1.01 per share in the first quarter of fiscal 2021.
During brief remarks that clocked in at less than 7 minutes, and did not include a question and answer period, Furlong highlighted several other first-quarter benchmarks including:
- Cash and cash equivalents of $1.035 billion at the end of the quarter, and virtually no debt.
- Inventory was $917.6 million at the end of the quarter, up from $570.9 million a year ago, due to a decision to build up merchandise levels to meet increased demand and to avoid out-of-stocks and other supply chain issues.
- GameStop launched a digital asset wallet last month that allows users to store, send, and receive cryptocurrencies and NFTs. The wallet has seen “significant downloads” and has achieved a five-star rating in the Chrome store, Furlong said. The wallet will enable transactions on GameStop’s NFT marketplace when it launches in the second quarter. “We firmly believe that digital assets are core to the future of gaming,” Furlong said.
Other interesting numbers, not discussed by Furlong on the earnings call, but contained in the earnings release, showed that revenue from software sales such as videogames, and from collectibles, increased during the quarter, compared to a year ago, while hardware sales decreased.
Software sales rose to $483.7 million, or 35.1% of revenue, from $397.9, or 31.2% in the first quarter of 2021.
Collectibles increased to $220.9 million, or 16%, compared to $$175.4 million or 13.7% a year earlier.
Hardware and accessories sales decreased to $673.8 million from $703.5 million in the first quarter of 2021. Hardware sales were 48.9% of net sales in the most recent quarter, compared to 55.1% in the first quarter of 2021.
Foot traffic analytics firm Placer.ai reported Tuesday that GameStop’s efforts to right-size its store fleet by closing hundreds of stores appears to be “bringing the retailer’s brick and mortar operations back to health.”
According to Placer.ai, GameStop’s visits per store have stayed close to pre-pandemic visits-per-venue numbers for most of the past seven months. Weekly visits per store throughout May were close to 2019, according to Placer.ai.
The goal of GameStop’s turnaround plan, Furlong said, was to “transform a decaying brick and mortar retailer into a technology-led organization that meets customers’ needs through stores, ecommerce properties and through emerging digital marketplaces and online communities.”
The new tech products – the digital asset wallet and the NFT marketplace that will launch this quarter “demonstrate that we are in fact starting to transform,” Furlong said.