GameStop Corp. posted an 8.5 per cent decline in sales in the third quarter amid a broad-based decline in game spending.
Net sales were US$1.19 billion in the three months ended Oct. 29, lower than two analysts’ projections for US$1.39 billion. The adjusted loss per share was 31 cents, worse than estimates for a 29 cent loss. Very few analysts cover the company, which is valued at US$7 billion and whose stock is notoriously volatile. The shares rose about 1 per cent after the results were published.
Ryan Cohen, who joined the board and became chairman last year, has been trying to revive growth at Grapevine, Texas-based GameStop, which has slowed as gamers shift from buying game discs to digital downloads. During the pandemic, GameStop became emblematic of the so-called meme-stock craze whereby retail traders bid up the price of certain companies, prompted by chatter on Reddit and other social media outlets, rather than business fundamentals.
Axios reported earlier this week that GameStop had started another round of job cuts, with an emphasis on the team building the company’s blockchain wallet. In July, GameStop also announced it was trimming an unspecified number of workers and ousted former Chief Financial Officer Mike Recupero. GameStop made no mention of job cuts in its earnings statement.
Cohen has been pushing GameStop into digital assets, but the strategy has proven to be a challenge. In September, the company announced a partnership with cryptocurrency exchange FTX U.S. as part of its effort to shift into nonfungible tokens. The plan was to collaborate on new e-commerce and online marketing initiatives, and to carry FTX gift cards in select stores. But in November, FTX filed for Chapter 11 bankruptcy after imploding with US$9 billion of liabilities, sending the crypto market into a tailspin.
In addition, much of its retail business was quashed during Covid lockdowns and results have been further hampered by supply constraints on consoles. Overall spending on gaming fell 5 per cent in the third quarter from a year earlier, according to industry researcher NPD Group.
GameStop shares, which are down 40 per cent this year, fluctuated after the report and were unchanged at 4:15 pm in New York Wednesday in extended trading.
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