Business

GameStop return promise fails

GameStop return promise fails
Written by admin

Head of GameStop ryan kohen and CEO Matt Furlong has pledged to monetize new opportunities like crypto and money while making the game retailer one of operational excellence and great in-store experiences. NFTs.

After more than a year of their collective and rather secretive leadership, the whole experiment is starting to look like a complete failure – it’s Wall Street’s long-running conundrum regarding the company’s business model, such as the shift to costly physical stores and digital games in dying malls. highlights their concerns.

Not helping GameStop’s comeback efforts is a total shambles in the once thriving digital asset market that Cohen and Furlong relied on (see: the NFT market crash or GameStops strategic partnership with the now defunct FTX).

The truth of this overwhelming comeback story was put on big display in GameStop’s third-quarter earnings released Wednesday evening. The damage came in two ways.

The logo of video game retailer GameStop is seen at a store in Düsseldorf, in western Germany, on January 19, 2022.  (Photo: INA FASSBENDER / AFP) (Photo: INA FASSBENDER/AFP via Getty Images)

The logo of video game retailer GameStop is seen at a store in Düsseldorf, in western Germany, on January 19, 2022. (Photo: INA FASSBENDER/AFP via Getty Images)

First, another extremely weak quarter of the financial statements:

  • Net sales are -8.5% year over year.

  • Sales declined in the hardware/accessory and software businesses — these businesses represented approximately 82% of GameStop’s year-to-date sales.

  • Sales fell in the United States, Canada, Australia and Europe.

  • Gross margins were unchanged from year to year.

  • Adjusted operating loss of $95 million. GameStop lost $354.9 million year-to-date on an adjusted operating basis.

  • Total cash fell to approximately $1 billion from $1.4 billion in the previous year’s quarter.

The other aspect that is starting to take shape right now is GameStop’s turnaround of invested capital to change the course of its business for the longer term. The pivot marks a complete comeback after a few ugly quarters that caused the volatile stock price to drop 40% in 2022.

“Today, we’re in the process of adjusting corporate costs to our needs going forward, after we’ve completed most of the necessary upgrades to our systems, execution capabilities, and overall foundation,” Furlong said in another relatively short — 8-minute — earnings call. said. “Most of our cost cuts will be due to corporate headcount reductions in the second half of this calendar year. In some cases, the people who helped us complete key initiatives left voluntarily and are not replaced. In other cases, parts of the organization where we can leverage work completed in the last 18 months to work with increased efficiency. We decided to abolish or modernize it.”

This new round of cost cutting is a clear sign of GameStop’s pullback; this is an indication that the company wants to start showing some lucrative returns for investors (including Cohen) at the expense of any vision of great returns.

A person browses games on an XBox One Display at GameStop in Manhattan, New York, USA, December 7, 2021. REUTERS/Andrew Kelly

A person browses games on an XBox One Display at GameStop in Manhattan, New York, USA, December 7, 2021. REUTERS/Andrew Kelly

Furlong, a former Amazon executive, added that the company’s “two overarching priorities” will be to “achieve profitability in the near term and drive pragmatic growth in the long term.”

In other words, the novice video game retailer is breaking Cohen and Furlong’s promise to redesign GameStop. GameStop loyalists who still support the company would be wise to admit that the company’s meme stock era thesis is being resolved in real time.

Brian Sozzi He is a great editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and he LinkedIn.

Click here for the latest trending stocks of the Yahoo Finance platform

Click here for the latest stock market news and in-depth analysis, including the events that moved the stock.

Read the latest finance and business news from Yahoo Finance

Download the Yahoo Finance app for Apple horse Android

Follow Yahoo Finance twitter, Facebook, instagram, flipboard, LinkedInand YouTube

About the author

admin

Leave a Comment