GameStop Corp. (NYSE:GME)
After-hours trading on September 7, 2022, GameStop Corp. (NYSE:GME) shares rose by 11.7 percent, following the company’s announcement of a smaller loss than projected for the second quarter of fiscal 2022. The company also announced a relationship with FTX US, one of the leading cryptocurrency exchanges.
However, the loss was more comprehensive than in the same year. The troubled video game retailer’s revenue fell year over year and short of the Zacks Consensus Estimate in the fiscal second quarter.
GameStop has been trying to modernize and expand the company using new technologies. Located in Grapevine, Texas, the company created its NFT marketplace to facilitate the buying, selling, and trading of NFTs by gamers, developers, collectors, and others. Using SAP, management could bring its infrastructure into the current day and make it more stable.
Q2: The Breakdown
GameStop’s adjusted loss per share in the second quarter of fiscal 2022 was 35 cents, less than the Zacks Consensus Estimate loss per share of 38 cents. The company’s adjusted loss per share was 19 cents in the same period a year ago.
While the Zacks Consensus Estimate was $1,254.7 million, the company only recorded net revenues of $1,136 million. This figure was down from the prior year’s report of $1,183.4 million in the fourth quarter. Management noted that the percentage of revenues attributed to new and expanded brand connections remained high.
According to the breakdown of sales, hardware and accessories decreased from $609.6 million in the prior year’s third quarter to $596.4 million in the most recent quarter. The software industry recorded revenue of $316.4 million, down from the prior-year quarter’s $396.6 million. Collectibles sales increased to $223.2 million from $177.2 million in the same period last year.
Total revenue was down to $282.2 million from $320.9 million in the same period a year ago, and gross margin shrank to 24.8% from 27.1%.
Amounts spent on selling, general, and administrative costs were revised upward to $388.4 million from $372.3 million in the same period a year ago.
The company incurred an adjusted operating loss of $106.2 million in the reported quarter. In the prior-year quarter, it had posted an adjusted operating loss of $51.4 million. Loss in adjusted EBIDTA was $78.1m, up from a loss of $29.5m in the same period last year.
Exciting New Thing
The two companies just announced a relationship that would bring more GameStop customers into the FTX US (FTX) network of communities and marketplaces. Online retail giant GameStop has teamed up with e-commerce and marketing firm FTX to launch several new initiatives. Furthermore, it will begin stocking FTX gift cards at several retail locations.
Different Financial Considerations
After the quarter, the Zacks Rank #3 (Hold) firm had $908.9M in cash and cash equivalents, $32.1M in net long-term debt, and $1,343.5M in stockholders’ equity. There was $734.8 million worth of goods in stock as of the period under review, up from $596.4 million at the end of the comparable period one year prior. Company stockpiles are sufficient to meet consumer demand and buffer against disruptions in the supply chain.
Second-quarter cash flow from operations was a negative $103.4 million, compared to a negative $11.5 million at the same time a year ago. Over the quarter, $20.5 million was spent on capital improvements.
During the same time frame, the industry has dropped by 25%, while GME’s stock has been down 8.6%.
Featured Image – Megapixl © Abatinichr