GameStop Corp. (NYSE: GME), an American video game, consumer electronics, and gaming merchandise retailer, has reported a surprise loss for the fourth quarter of Fiscal 2021 (ended January 29), compared with expectations of earnings by analysts. Costs related to supply constraints and the transition towards an e-commerce business acted as headwinds.
Following the results, shares of the company lost almost 8% in the extended trading session on Thursday.
Results in Detail
GameStop reported an adjusted loss of $1.86 per share versus earnings of $1.34 per share recorded in the same quarter last year. The consensus estimate was pegged at earnings of $0.84 per share.
Meanwhile, net sales of $2.25 billion surpassed the Street’s estimate of $2.22 billion and jumped 6% year-over-year. New and expanded brand relationships, including Alienware, Corsair, and Lenovo, among others, drove sales in the quarter.
Hardware and accessories quarterly sales were $1.19 billion, up 2.6% year-over-year. Additionally, collectibles sales surged 22.4% to $279.3 million, while software sales grew 7.5% to $785.9 million.
Gross margins for the quarter came in at 16.8%, down from 21.1% in the prior-year quarter.
For Fiscal 2021, GameStop reported an adjusted loss of $4.56 per share versus a loss of $2.95 per share recorded in Fiscal 2020. Net sales came in at $6.01 billion, up 18.1% year-over-year.
By year-end, inventory stood at $915 million, higher than the $602.5 million recorded at the end of Fiscal 2020. The increase in inventory reflected the company’s focus on catering to elevated customer demand and easing supply chain challenges.
As of January 29, 2022, cash and cash equivalents stood at $1.27 billion.
CEO Comments
During the earnings call, the CEO of GameStop, Matt Furlong, said, “The combination of supply chain issues and the Omicron variant had a sizable impact on this past year’s holiday season. We made the conscious decision to lean in and absorb higher costs in order to meet customer demand.”
The company has plans to launch its marketplace for non-fungible tokens (NFTs) by the end of Fiscal Q2 2022.
Wall Street’s Take
The Street is bearish on the stock with a Moderate Sell consensus rating based on one Hold and 2 Sells. The average GameStop price target of $56 implies 36.15% downside potential to current levels. Shares have fallen 56.53% over the past year.
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