GameStop Ups Fiscal 2021 Revenue — and Loss

Game Stop’s first report card under new management suggests it still has a way to go in its quest to transition beyond its legacy retail footprint.

The nation’s largest video game retailer reported a fourth-quarter (ended Jan. 29) loss of $147.5 million on revenue of $2.25 billion. That compared with net income of $80.5 million on revenue of $2.12 billion in the previous-year period.

For the fiscal year, GameStop expanded its loss to $381.3 million on revenue of $6 billion. That compared with a fiscal loss of $215.3 million on $5 billion in revenue in 2020.

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When GameStop last year hired Chewy.com founder Ryan Cohen as its new chairman, the tech-savvy entrepreneur shook up senior management, transplanting the company’s brick-and-mortar retail focus with e-commerce and digital distribution, including hiring former Amazon executive Matt Furlong as CEO.

On the company’s March 17 earnings call, Furlong attributed the increased loss to growing pains as the company transitions away from packaged media to digital gaming and distribution. Indeed, the company plans to launch a branded non-fungible token marketplace by the end of Q2 in an effort to capitalize on the reported $40 billion NFT market.

The chain did up its “PowerUp” rewards membership program by 32% from 2020, ending last year with more than 5.8 million members.

“It is important to stress that GameStop had become such a cyclical business, and so capital-starved, that we have had to rebuild it from within,” Furlong said on the call. “We felt, and continue to feel, that investing in our customers and rebuilding brand loyalty right now is in the company’s best interest over the long term.”

Wall Street isn’t so sure. GameStop shares fell more than 7% in after-market trading.

GameStop Stock Doc ‘Gaming Wall St’ Debuts March 3 on HBO Max

The two-part Max Original documentary Gaming Wall St, about the GameStop stock controversy, debuts March 3 on HBO Max.
 
Narrated by Kieran Culkin (HBO’s “Succession”), the documentary explores the historic 2021 short squeeze of GameStop, and how a group of armchair investors and online vigilantes ultimately helped expose the dark underbelly of Wall Street.
 
Gaming Wall St peels back the layers of one of the most talked about news stories in 2021, revealing the systemic issues and underbelly of the financial world,” said Joanna Zwickel, SVP of documentary features and series at producer Gunpowder & Sky in a statement. “It’s an honor to have this series live on HBO Max.” 

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“I wanted to create a compelling documentary about a niche online community which grew into the movement behind GameStop and momentarily shifted the balance of power on Wall Street,” said director Tobias Deml in a statement. “I saw a great need for access to education about investing. We have the opportunity to right a decades-old wrong created by powerful firms that have been gaming the system to the detriment of society. I hope that viewers will feel empowered to see themselves as investors and be part of a much-needed reform to Wall Street.”

 

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.

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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.

GameStop Opens Lower Following Mixed Financials

The day after world’s largest video game retailer GameStop posted mixed second-quarter (ended July 30) financial results, company shares trended down during early Sept. 9 trading.

Despite a retail footprint of thousands of stores, GameStop rebooted its senior management team, incorporating a team of e-commerce experts led by new chairman Ryan Cohen, founder of Chewy.com. The company is in the process of transitioning from physical retail to technology and online gaming.

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Cohen & Co.’s ascendancy has been fueled in part by crowdsourced-investors looking to manipulate GameStop shares for short-term gains. The strategy has worked thus far, with shares up 860% year-to-date based largely on non-business fundamentals. Quarterly revenue topped $1.18 billion, above an industry estimate of $1.12 billion.

Regardless, GameStop management conducted no Q&A during its Sept. 8 fiscal call — the second consecutive fiscal period it has done so.

As a result, much of the established Wall Street investment community has abandoned GameStop, except Wedbush Securities game expert Michael Pachter. The analyst questions when Cohen will live up to his hype.

“I am waiting for his brilliant strategy, and it’s not going to be brilliant,” Pachter told Yahoo Finance. “If it was brilliant, then he would have let us know, months and months and months ago. [Cohen] is trying to revolutionize an industry that has already passed him by. He’s audacious, and he’s wrong on this one.”

GameStop to Rebrand EB Games in Canada

GameStop July 28 announced that it plans to rebrand 4,000 EB Games stores in Canada to GameStop. By the end of this year, EB Games’ Canadian locations and online store will assume the GameStop brand and name.

GameStop acquired Electronic Boutique in 2005 for $1 billion. It remains Canada’s largest video game retailer.

“This decision follows our receipt of feedback from our valued customers and stockholders,” GameStop said in a media statement.

The company, under a new CEO Matt Furlong and chairman Ryan Cohen, will join the S&P MidCap 400 exchange on Aug. 4.

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GameStop Expands Fulfillment With New Facility in Reno, Nevada

GameStop July 6 announced the continued expansion of its North American fulfillment network and entry into a lease of a 530,000 square foot facility in Reno, Nevada, which is expected to be operational in 2022.

The nation’s largest video game retailer’s new presence in Reno will position it to grow in-store and online product offerings and expedite shipping across the west coast. This expansion follows GameStop’s entry into a lease of a 700,000 square foot facility in YorkPenn.

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The facility leases follow the June 21 appointment of new CEO Matt Furlong, a former Amazon executive, hired as part of new chairman Ryan Cohen’s initiative to expand GameStop’s e-commerce initiatives.

GameStop Generates $1.1 Billion at the ‘ATM’

GameStop, the world’s largest standalone video game retailer, continues to defy Wall Street sensibilities despite middling financials.

The Grapevine, Texas-based chain said it generated about $1.1 billion in revenue from “at-the-market” (ATM) sales of 5 million shares of common stock. An ATM offering is a type of stock sale utilized by publicly traded companies in order to raise capital over time.

GameStop, which said it would use the proceeds for “general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet,” initiated the sale on June 9.

Meanwhile, GameStop reported a net loss of $215 million for the fiscal year ended Jan. 31. Revenue declined 22% to $5 billion.

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Since the beginning of the year, the chain has become caught up in a social media frenzy pitting crowdsourcing individual day traders against established Wall Street hedge funds. Under a David vs. Goliath media spotlight, individual traders working together were able to skyrocket GameStop’s stock valuation, resulting in significant fiscal losses for hedge funds that had bet the shares would decline in value.

Abetting the situation was the arrival of Chewy.com founder Ryan Cohen, a populist star among individual traders, who initially bought a lot of shares of GameStop when prices were low, i.e. $4 to $5 per share, and then proceeded to help  jumpstart the stock in valuation.

Soon Cohen was named to the board and then chairman. That meant the arrival of new senior executives, including former Amazon executive Matt Furlong as new CEO, with a push to jumpstart e-commerce revenue. Meanwhile, previous CEO George Sherman is exiting with a golden parachute worth about $100 million thanks to GameStop shares hovering around $214 per share in pre-market trading — compared with about a $3.77 per share low within the past fiscal year.

GameStop Adds New CEO Matt Furlong to Board

GameStop, the world’s largest video game retailer, June 21 announced the appointment of new CEO Matt Furlong to its board of directors, effective immediately. The appointment date aligns with Furlong’s start date as new chief executive officer. Coinciding with Furlong’s appointment, outgoing CEO George Sherman has retired from the board. Five of the six members of the Board remain independent.

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Matt Furlong

Furlong, a former Amazon executive, was hired as part of new chairman Ryan Cohen’s initiative to expand e-commerce initiatives.

Cohen, who launched online pet supply service Chewy.com, is a favorite among independent day traders and investors. His involvement in GameStop contributed to the company’s shares becoming a social media trading meme. Shares opened June 21 above $220 per share, compared with a 52-week low of $3.77 per share. How much of that valuation is actually based on company financials is anyone’s guess.

GameStop Under SEC Scrutiny With Stock Up 1,500% in 2021

GameStop June 10 disclosed it is being investigated by federal regulators from the Securities Exchange Commission — the result of months-long stock volatility that has seen the video game retailer’s shares skyrocket 1,500% in value in 2021.

The retailer said it is reviewing the regulatory request, producing the requested documents and intends to cooperate fully with the SEC.

“This inquiry is not expected to adversely impact us,” GameStop said in a statement.

After raising almost $552 million from the issuance of 3.5 million shares in April, GameStop said it plans to issue another 5 million shares in the near future. The stock, along with AMC Entertainment’s, has become fodder for individual traders fueled by social media and crowdsourced stock moves. Company shares closed June 9 up over $300 a share from little more than $4 per share last July.

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“The trading probe is definitely a big red flag,” David Trainer, CEO of research firm New Constructs, said in a media interview. Trainer characterized the SEC probe as “the needle that can bust the balloon of the stock’s valuation.”

Wedbush Securities media analyst Michael Pachter contends the regulatory investigation is normal in light of the stock jump. But the analyst believes the June 10 morning decline in share price has more to do with the new stock sale.

“We think that the sell-off had little to do with the fundamentals and everything to do with the company’s failure to reveal its strategy,” Pachter wrote in a June 10 note.

Regardless, Texas-based GameStop saw first-quarter sales (ended May 1) increase 25% to $1.27 billion, from revenue of $1 billion in the previous-year period. Net loss narrowed nearly 60% to $66.8 million, from a net loss of $165.7 million a year earlier.

Speaking on his last call as CEO, George Sherman said the increased revenue came despite the closure of 118 under-performing stores. GameStop still operates nearly 4,700 stores worldwide.

Former Amazon executive Matt Furlong becomes GameStop’s new CEO on June 21.

Furlong’s arrival, along with fellow Amazon executive Mike Recupero as new CFO, underlines the fact that GameStop’s the future is online and with ecommerce. The chain is adding 700,000-square feet to a fulfillment facility in York, Pennsylvania.

“This new distribution center, which is expected to be operational by the fourth quarter of this year, will enhance our order fulfillment capabilities on the East Coast,” Sherman said on the June 9 call.

 

GameStop Names Ex-Amazon Executives as New CEO, CFO

Just hours after his appointment as new chairman of the board at GameStop, Ryan Cohen June 9 wasted little time returning to the online universe in selecting a new CEO and CFO.

CEO Matt Furlong

The venerable video game retailer has named Matt Furlong as new CEO and Mike Recupero as new CFO. Furlong and Recupero come from Amazon, where they each held senior roles and oversaw various growth initiatives during their respective tenures. Furlong’s start date is June 21, and Recupero’s start date is July 12.

Furlong replaces CEO George Sherman, who held the position since 2019, but was forced out with the arrival of Cohen, founder of online pet supply company Chewy.com.

Cohen is looking to jumpstart GameStop’s e-commerce initiatives, and Furlong is a veteran e-commerce leader with significant experience implementing growth strategies across global geographies and product categories. Most recently, he was a country leader and oversaw Amazon’s Australia business. He was previously a technical advisor to the head of Amazon’s North America Consumer business. Throughout his nearly nine years at Amazon, he also ran a variety of product categories and oversaw strong market share expansion.

Recupero replaces Jim Bell, who exited the retailer in February. The former is a technology industry finance executive, who spent more than 17 years at Amazon supporting growth across global geographies and product categories. He most recently served as CFO of the North American Consumer business after serving as CFO of Prime Video. He previously served as the CFO of the European Consumer business. He began his career at Amazon, holding analyst, manager and director roles of increasing responsibility.