Sales of GameStop Corp. rose as more people returned to its stores last quarter, but its loss deepened, dampening investors’ hopes of seeing signs of recovery for the video game retailer.
The Grapevine, Texas-based company on Wednesday posted $1.38 billion in net sales for the quarter through April 30, up from $1.28 billion a year earlier. On an adjusted basis, the retailer reported a loss of $2.08 per share, compared with a loss of 45 cents per share in the same period a year ago. Three analysts polled by FactSet had expected net sales of $1.32 billion and an adjusted loss of $1.45 per share.
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GameStop said it increased its inventory to $917.6 million from $570.9 million a year earlier and ended the period with cash and cash equivalents of $1.04 billion. While hardware sales declined, that decline was offset by growth in software and collectibles sales, the company said.
Last year, GameStop was at the center of a month-long social media-fueled shopping frenzy. The company has revamped its leadership to help it diversify its business and return to profitability, but the results so far have not been as dramatic as the rise in the company’s share price at the start of the year. ‘last year.
Shares of the company have plunged more than 50% in the past 12 months. The Nasdaq Composite Index fell about 13% over the same period.
Shares rose about 3% in early after-hours trading after the company reported earnings on Wednesday.
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Last June, GameStop shuffled its management team and board of directors in a bid to reverse years of languid sales and strategic missteps. The company named two Amazon.com Inc. veterans as chief executive and chief financial officer, and shareholders elected activist investor Ryan Cohen as chairman.
The video game retailer has struggled to make a profit as many gamers have turned to downloading and streaming games over the Internet, instead of buying the hard copies that GameStop specializes in selling. Additionally, publishers are releasing more free-to-play games that generate revenue through the sale of virtual goods.
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Under Mr. Cohen’s leadership, GameStop has worked to turn itself around in part by investing in efforts to improve and boost its e-commerce business. The company has also launched a digital wallet which it says will enable transactions on a marketplace it is building for gamers and others. to buy, sell and trade non-fungible tokens, or NFTs.
Wedbush analyst Michael Pachter was skeptical of the company’s NFT plans, saying in a recent note to investors that major console and mobile game developers are unlikely to allow third parties such as than GameStop to capture a significant share of consumer spending on digital goods. It also expects sales to continue to be squeezed by lower demand for physical software and difficulty in sourcing the game consoles it sells in its stores due to the chain’s crisis. ‘supply.
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“These headwinds, combined with high levels of spending on its NFT efforts and other cost centers, could trigger significant cash burn for much of next year or more,” Mr. Pacht.
Write to Sarah E. Needleman at firstname.lastname@example.org