GAMESTOP reported a third-quarter profit on Tuesday (Dec 10) as the video game retailer ramps up its cost-saving efforts, including shutting stores and selling higher-margin goods.
Chief executive officer Ryan Cohen told investors in June the company would operate with “a smaller network and more value-added” items as a part of its attempt to boost sales and profitability.
This helped GameStop report a net income of US$17.4 million in the third quarter, compared with a net loss of US$3.1 million a year ago.
Its shares were up more than 2 per cent in extended trading.
The company has been grappling with a slower turnaround of its main business as it struggles to ramp up sales of video game hardware and collectibles, while facing stiff competition from online retail giants such as Amazon.com and eBay.
It is also burdened by an uncertain macroeconomic environment, as consumers cut back on discretionary spending owing to stubborn inflation and a slow recovery in the gaming market.
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Wedbush Securities analyst Michael Pachter said he does not see any signs the company’s “core business is salvageable”.
“There is no turnaround, just stock sales to willingly foolish investors,” Pachter said.
Its shares have rallied more than 50 per cent this year after stock influencer Keith Gill, also known as “Roaring Kitty”, reemerged earlier in 2024, sparking excitement among his followers.
The company has taken advantage of the jump in its stock price by raising around $3 billion earlier this year through share sales.
Gill was a key figure in the meme-stock frenzy of 2021, in which GameStop stock surged 1,600 per cent at one point in January that year, crushing hedge funds that had bet against the video game retailer.
GameStop’s third-quarter revenue fell 20 per cent to US$860 million, compared with US$1.1 billion a year ago.
Cash and cash equivalents at the end of the third quarter were US$4.6 billion, compared with US$4.2 billion in the preceding three-month period. REUTERS
