A screen displays GameStop’s logo and business information on the floor of the New York Stock Exchange (NYSE) on March 29, 2022.
Brendan McDermid | Reuters
GameStop said Wednesday that its sales in the third fiscal quarter fell and its cash flow fell sharply, as the bricks-and-mortar retailer worked to expand its digital presence.
During the third fiscal quarter, which ended October 29, GameStop’s total sales were approximately $1.2 billion, compared to $1.3 billion in the same period last year. The company’s cash and cash equivalents fell to nearly $804 million from about $1.4 billion a year earlier.
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Shares of the company rose nearly 3% in after-hours trading on Wednesday, after falling 4.8% in the regular session.
GameStop has been scrambling to become profitable and revamp its brick-and-mortar retail business after what executives said were years of underinvestment. Over the past few months, the retailer has changed direction and focused on initiatives to root it more in the digital world.
GameStop CEO Matthew Furlong said on a call with investors on Wednesday that the company is “trying to accomplish something unprecedented in retail…seeking to transform a legacy business once on the brink of bankruptcy.” .
The company reported a net loss of nearly $95 million, a slight improvement from a loss of about $105 million in the same period last year.
Furlong added that the company is working to strengthen its balance sheet and cushion its cash position, hoping to put it in a position to explore complementary business acquisitions. The CEO added that the company would continue to cut costs, with layoffs in the second half of 2022.
GameStop’s results cannot be compared to estimates because too few analysts cover the company. As in previous quarters since the pandemic began, GameStop did not provide a financial outlook.
The retailer continued to hold a lot of inventory on its balance sheet: $1.13 billion at the end of the quarter, although down slightly from $1.14 billion in the same period last year. Like other retailers, GameStop faced an inventory backlog after intentionally inflating merchandise to deal with higher customer demand and supply chain issues.
GameStop bolstered its inventory position earlier this year by divesting a small portion of its merchandise in low-demand categories, Furlong said Wednesday.
The company, known as meme stock, has adapted its business to a digital world. He brought in new leaders, including CEO Matt Furlong, a Amazon Chewy veteran and founder and activist investor Ryan Cohen as Chairman of the Board.
Still, the brick-and-mortar retailer has struggled to turn a profit in recent years, leading to cost cuts and management shake-up. Earlier this year, it fired chief financial officer Mike Recupero and laid off employees.
The company also launched an NFT Marketplace in July, which was opened to the public for beta testing. The marketplace allows users to connect their own digital asset wallets, including the recently launched GameStop wallet, so they can buy, sell, and trade NFTs for virtual goods.
GameStop said in a press release Wednesday that its sales attributable to new and expanded brand relationships “were strong in the quarter, while sales in the collectibles category remained strong year-to-date.” .
GameStop said last month that it had ended its partnership with FTX, after the crypto exchange filed for bankruptcy. A few months earlier, GameStop announced the partnership in an effort to introduce its customers to the crypto world and market, and also began offering FTX gift cards in some of its stores.
In a tweet, the company said it would issue full refunds to affected customers.
Furlong said on Wednesday that the company “is fortunate that its exposure to digital assets has been very modest.” FTX’s bankruptcy filing has caused repercussions in the crypto market. The CEO did not provide any updates regarding his recently ended partnership with FTX.
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