GameStop shares slide after profit falls short of expectations
GameStop, the roller-coaster stock championed by Reddit-based traders, fell in pre-market trading after posting disappointing fourth-quarter earnings that outweighed the recruitment of new executives.
Shares of the video game retailer were down 11 per cent at $161.60 as of 12.22pm UAE time yesterday after it reported a profit of $1.34 a share for the three months up to January 30, excluding some items. That compared with an average projection of $1.43 from analysts.
Although a new generation of game consoles helped spur purchases, the company did not receive as big a bump as expected. Net sales fell by 3.3 per cent to $2.12 billion in the quarter, short of the $2.24bn estimate.
Still, the console surge helped lift same-shop sales by 6.5 per cent, with online revenue up 175 per cent.
GameStop named technology veteran Jenna Owens as chief operating officer, bringing on board the former Amazon.com and Google employee to steer its push into e-commerce.
It also appointed two other executives with technology experience as part of a push by activist investor and board member Ryan Cohen to make the brick-and-mortar chain a digital powerhouse.
Investors expected more guidance on GameStop’s new strategic direction during a call on Tuesday, but the company declined to take questions.
“I do not think the results matter much at this point – people will be looking to how they transform themselves from here to reduce the reliance on brick and mortar and expand e-commerce,” said
Bloomberg Intelligence analyst Matthew Kanterman. “But this is no easy task, despite who they bring in to help drive the turnaround.”
Chief executive George Sherman said the company will focus this year on customer service and experience – both key components to a successful turnaround for GameStop.
“They have identified the key factors but it is still a matter of hearing more about the actual strategy to deliver unique value to customers. Hopefully, they add more to that discussion soon,” said Doug Clinton, managing partner at Loup Ventures.