A display shows the logo and trading information for GameStop on the floor of the New York Stock Exchange (NYSE) on March 29, 2022.
Brendan McDermid | Reuters
GameStop The brick-and-mortar retailer said on Wednesday that sales fell in the fiscal third quarter and cash piles shrank sharply, as the brick-and-mortar retailer works to expand its digital presence.
GameStop’s total sales for the fiscal third quarter ended Oct. 29 fell to about $1.2 billion from $1.3 billion in the same period last year. The company’s cash and cash equivalents fell to about $804 million from about $1.4 billion a year ago.
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The company’s shares rose nearly 3% after falling 4.8% in after-hours trading on Wednesday.
GameStop is working to become profitable and revamp its brick-and-mortar retail business after years of underinvestment, which executives said. In recent months, the retailer has reshuffled its leadership and focused on initiatives to make it stronger in the digital world.
GameStop CEO Matthew Furlong said on a call with investors Wednesday that the company is “trying to achieve something unprecedented in retail … trying to turn around a legacy business that was once on the brink of bankruptcy.”
The company reported a net loss of about $95 million, a slight improvement from a loss of about $105 million in the same period last year.
Furlong added that the company is working to further strengthen its balance sheet and soften its cash position, which would put it in a position to explore free enterprise acquisitions. The CEO added that the company will continue to cut costs with layoffs in the second half of 2022.
GameStop’s results cannot be compared to estimates because few analysts cover the company. As in previous quarters since the start of the pandemic, GameStop did not issue a financial forecast.
The retailer continued to keep a lot of inventory on its balance sheet: $1.13 billion at the end of the quarter, though it was down slightly from $1.14 billion in the same period last year. Like other retailers, GameStop has been dealing with inventory backlogs after intentionally increasing merchandise to combat higher customer demand and supply chain issues.
GameStop bolstered its inventory position earlier this year by relegating a small portion of its merchandise to categories with soft demand, Furlong said Wednesday.
A company known as the meme fund is adapting its business to the digital world. It found new management, including CEO Matt Furlong Amazon veteran and Chewy founder and activist investor Ryan Cohen as chairman of the board.
Still, the brick-and-mortar retailer has struggled to turn a profit in recent years, leading to cost cuts and leadership shakeups. Earlier this year, it fired chief financial officer Mike Recupero and cut staff.
The company also launched an NFT market open to the public for beta testing in July. The marketplace allows users to connect their own digital asset wallets, including the recently launched GameStop Wallet, so they can buy, sell and trade NFTs for virtual goods.
GameStop said in a news release Wednesday that sales attributable to new and expanded brand relationships “were strong in the quarter, while sales in the collectibles category remained strong for the year.”
GameStop said it ended its partnership with FTX last month after the cryptocurrency exchange collapsed. A few months ago, GameStop announced a partnership to introduce its customers to the crypto world and market, and also started carrying FTX gift cards in some of its stores.
In a tweet, the company said it would issue full refunds to affected customers.
Furlong said Wednesday that the company’s “exposure to digital assets is very modest.” FTX’s bankruptcy filing sent ripples through the cryptocurrency market. The CEO did not provide any updates on its recently ended partnership with FTX.