GameStop Reports Mixed Q3 Earnings, More Store Closures
The leading video game retailer reported third-quarter earnings after the market closed Tuesday.
What Happened: GameStop Corp (NYSE: GME) reported third-quarter sales of $1 billion, which came in below consensus estimates of $1.08 billion. The company’s adjusted earnings per share were a loss of 53 cents per share, which beat estimates of a loss of 85 cents per share.
Why It’s Important: The highlight for the company’s third-quarter could be e-commerce growth, as that segment saw year-over-year growth of 257% in the third quarter.
E-commerce made up 25% of the company’s total revenue. GameStop’s e-commerce revenue was up 800% year-over-year in the second quarter.
The company closed 74 stores in the third quarter, which brought the grand total to 462 stores closed year-to-date.
GameStop also ended the quarter with $602.6 million in cash and underwent several cost savings measures in the quarter to improve the financial position.
Related Link: Jefferies Sees Upside In GameStop With New Xbox, Playstation As Catalysts
What’s Next: The fourth quarter could be the key one for GameStop investors to watch as it will include the highly anticipated release of new consoles from Sony Corporation (NYSE: SNE) and Microsoft Corporation (NASDAQ: MSFT). The company said it had “a positive start to the fourth quarter.”
Same-store sales were up 16.5% in the month of November compared to the prior year. The company noted it saw unprecedented demand at the start of the fourth quarter.
Benzinga’s Take: The optimism around GameStop could come to a quick end as the console release was the major catalyst analysts were pointing to. The fourth quarter will be the one for investors to watch as it will include the figures from those new consoles.
Investors should note that November sales in fiscal 2020 were $791.1 million versus $747.6 million.
The sharp rise in same-store sales growth could be due to the closure of stores and customers shopping at nearby stores.
GME Price Action: Shares of GameStop are down 9% to $15.51 in after-hours trading. The drop follows the regular trading session that saw shares rise 4% to $16.95 and hit a new 52-week high of $17.17 earlier in the day.
Photo credit: Oxiq, WikiMedia Commons
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