‘GAME’S LOW SCORE
Stock sinks on report of weaker sales – despite ‘Reddit rally’
Game Stop share stumbled on Tuesday despite a slew of high-profile hires after it reported weaker-thanexpected quarterly sales during the period that coincided with the most euphoric days of the “Reddit rally.”
Shares of the video game retailer plunged more than 11 percent in late trading after it said the pandemic negatively impacted its brick-andmortar business in the fourth-quarter, including the all-important holiday sales season.
GameStop reported a 3.3 percent slide in revenue for the 13 weeks ending Jan. 30 to $2.12 billion from $2.19 billion. Wall Street had been expecting sales of $2.21 billion.
The company reported a quadrupling of its net income of $80.5 million, or $1.19 a diluted share, but it was helped by an income-tax benefit and still fell short of analysts’ expectations for $1.35 a share.
The news sent shares of the retailer on a roller-coaster ride after hours, first rising around 8 percent before cratering over 11 percent, which represented a loss of about $20 a share from its closing price of $181.75.
In an effort to turn its business around, Game Stop announced a series of high-profile executive appointments, the most prominent of which was Jenna Owens, a former Amazon and Google exec who has been tapped as the retailer’ s chief operating officer.
GameStop has also hired Neda Pacifico, a former executive of Amazon and Chewy.com, as senior vice president of e-commerce. It tapped Ken Suzuki from Zulily as its vice president of supply-chain systems.
The new executives all begin on March 29, GameStop said.
It also has added Chewy co-founder Ryan Cohen to its board of directors.
The widely anticipated earnings report was Game Stop’ s first since the January trading mania that saw day traders using Reddit message boards to encourage each other to buy the shares in an effort to stick it to hedge funds betting on the stock’s demise.
The hectic trading frenzy catapulted GameStop’s stock, which had been trading at under $5 a share just last year, to a high of $347.51 on Jan. 27. It’s come down in recent weeks but has still hovered around $200.
The rally also spurred losses at big hedge funds, a congressional hearing and the development of at least two Hollywood productions.
But the company’s financial results have yet to catch up to the stock as it grapples with long-term industry challenges. On Tuesday’ s call with investors,Game Stop chief executive officer George Sherman dubbed 2020 “unprecedented” and said that the company had to shutter 693 stores.
“Our emphasis in 2021 will be on improving our e-commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalog,” said Sherman.