GameStop Stock Slips Lower On Wider Q3 Loss, Muted Video Game Sales
"We're seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy ... this path carries risk and is taking time," said CEO Mike Furlong.
"We're seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy ... this path carries risk and is taking time," said CEO Mike Furlong.
GameStop (GME) - Get Free Report shares slipped lower Thursday after the video game retailer posted its seventh consecutive quarterly loss amid fading demand and elevated cost pressures.
GameStop said its adjusted loss for the three months ending in October was pegged at 31 cents per share, or around $95 million, just outside the Street consensus forecast, as overall revenues fell 8.5% to $1.186 billion. Expenses were on the rise, with SG&A pegged at $387.9 million, or 32.7% of third quarter sales - a 20 basis point increase from the same period last year but down from the 34.1% level recorded over the previous quarter.
"We're seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy into a retailer that meets customers' needs through our stores, e-commerce properties, and emerging sales channels," CEO Mike Furlong told investors on a conference call late Wednesday. "This path carries risk and is taking time, but it is the path we are on."
GameStop shares were marked 0.27% lower in pre-market trading to indicate an opening bell price of $22.20 each, a move that would leave the stock down more than 36% over the past six months.
Furlong also noted that GameStop has "proactively minimized exposure to cryptocurrency risk throughout the year and does not currently hold a material balance of any token."
GameStop is planning to transition from a reliance on brick-and-mortar sales to a larger and more dynamic presence online as it builds-out its non-fungible tokens, or NFT marketplace following a tie-up earlier this year with Australian blockchain startup ImmutableX.
The group is hoping its GameStop Wallet, which allows users to store, send, receive and use both NFTs and cryptocurrencies across decentralized apps, will form the lynchpin of its digital asset strategy.
"Although we continue to believe there is long-term potential for digital assets in the gaming world, we have not, and will not, risk meaningful stockholder capital in the space," Furlong said.
Broader video game demand is also in decline, with FIFA and Apex Legends maker Electronic Arts (EA) - Get Free Report warning on weak end-of-year sales and Take-Two Interactive (TTWO) - Get Free Report issued a downbeat holiday season forecast only last month.
"We now have a firm understanding of the resources required to pursue opportunities in gaming, as well as high-potential growth categories like collectibles and pre-owned businesses," Furlong said. "Looking ahead, we have two overarching priorities: achieving profitability in the near term and driving pragmatic growth over the long term."
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