Volatile stock: A pedestrian walks by a GameStop store in San Francisco. The company’s earnings have slowed as gamers shift from buying game discs to digital downloads. — AFP
NEW YORK: GameStop Corp has posted an 8.5% decline in sales in the third quarter amid a broad-based drop in game spending.
Net sales were US$1.19bil (RM5.22bil) in the three months ended Oct 29, lower than two analysts’ projections for US$1.39bil (RM6.1bil).
The adjusted loss per share was 31 US cents (RM1.36), worse than estimates for a 29 US cent (RM1.27) loss.
Very few analysts cover the company, which is valued at US$7bil (RM30.7bil) and whose stock is notoriously volatile.
The shares rose about 1% after the results were published.
Ryan Cohen, who joined the board and became chairman last year, has been trying to revive growth at Grapevine, Texas-based GameStop, which has slowed as gamers shift from buying game discs to digital downloads.
During the pandemic, GameStop became emblematic of the so-called meme-stock craze whereby retail traders bid up the price of certain companies, prompted by chatter on Reddit and other social media outlets, rather than business fundamentals.
Axios reported earlier this week that GameStop had started another round of job cuts.
The emphasis will be on the team building the company’s blockchain wallet.
In July, GameStop also announced it was trimming an unspecified number of workers and ousted former chief financial officer Mike Recupero.
GameStop made no mention of job cuts in its earnings statement.
Cohen has been pushing GameStop into digital assets, but the strategy has proven to be a challenge.
In September, the company announced a partnership with cryptocurrency exchange FTX US as part of its effort to shift into non fungible tokens.
The plan was to collaborate on new eCommerce and online marketing initiatives, and to carry FTX gift cards in select stores.
But in November, FTX filed for Chapter 11 bankruptcy after imploding with US$9bil (RM39.6bil) of liabilities, sending the crypto market into a tailspin.
In addition, much of its retail business was quashed during Covid lockdowns and results have been further hampered by supply constraints on consoles.
Overall spending on gaming fell 5% in the third quarter from a year earlier, according to industry researcher NPD Group.
Software sales actually declined 19% in the quarter to US$352.1mil (RM1.54bil), suggesting that the company’s push to digital downloads hasn’t compensated for the decline in physical disc sales.
Hardware and accessories sales fell 6.4% to US$627mil (RM2.75bil).
Collectibles were a bright spot, gaining 7.9% to US$207.3mil (RM910mil).
GameStop shares, which are down 40% this year, fluctuated after the report and were little changed in New York in extended trading Wednesday. — Bloomberg
