GameStop Ups Q3 Revenue, Widens Loss

GameStop, the nation’s largest video game retailer, reported third-quarter (ended Oct. 30) revenue of nearly $1.3 billion, up 30% from revenue of $1 billion during the previous-year period. The chain also realized a net loss of $105 million, which widened 460% from a loss of $18 million in the prior-year quarter.

Much of the loss was attributed to front-loading investments in inventory to meet increased customer demand and mitigate supply chain issues during the pandemic. Inventory in the quarter topped $1.14 billion, compared with $861 million at the close of the prior year’s third quarter.

GameStop saw a 62% jump in hardware sales to $670 million, driven by sales of new-generation game consoles from Microsoft Xbox, Sony PlayStation, as well the Nintendo Switch. Software sales dipped 2% to $434 million, while accessories sales increased 30% to $192 million.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

GameStop also opened new offices in Seattle and Boston, which are technology hubs with established talent markets. Under new senior management looking to jumpstart digital gaming and consumer electronics sales, CEO Matt Furlong, on the fiscal call, said the company would continue to focus on the long term.

“We will continuously prioritize growth and market leadership over short-term margins,” he said without elaborating.

Wall Street wasn’t impressed, sending shares down more than 4% in premarket trading.

Michael Pachter, media/gaming analyst with Wedbush Securities in Los Angeles, said he expects to see “flattish top-line growth” in 2022, while remaining “quite optimistic” about a return to profitability.

At the same time, Pachter is no fan of GameStop’s volatile stock, which has been the subject of a high-profile short squeeze by crowdsourced individual investors, coupled with ongoing support from certain retail investors.

“[The actions] have spiked the share price to levels that are completely disconnected from the fundamentals of the business,” Pachter wrote in a Dec. 9 note.

Indeed, the Securities Exchange Commission is investigating trading activity surrounding GameStop shares. On Aug. 25, the SEC issued a subpoena calling for additional documents, as a follow up to an initial request for information surrounding the events that led to GameStop shares skyrocketing in value.

“We are in the process of producing the documents and have been and intend to continue cooperating fully with the SEC regarding this matter,” GameStop said in a statement.

Leave a Reply

Your email address will not be published.

one × 5 =

This site uses Akismet to reduce spam. Learn how your comment data is processed.