GameStop Reports Revenue Decline Amid Broader Gaming Slump




  • In Business
  • 2022-12-07 21:44:38Z
  • By Bloomberg
 

(Bloomberg) -- GameStop Corp. posted the biggest quarterly drop in revenue in two years, showing the struggling video game retailer's efforts to boost digital purchases haven't compensated for a decline in physical sales.

Most Read from Bloomberg

  • Putin Calls Russian Nukes Deterrent Factor, Says War Risk Rising

  • Peru's President Accused of Coup After Move to Dissolve Congress

  • Musk Spars With San Francisco Over Probe of Bedrooms at Twitter

  • Stock Traders Skittish With Treasury Curve Signals: Markets Wrap

  • Trump Companies Are Convicted in NY Criminal Tax Fraud Trial

Net sales fell 8.5% to $1.19 billion in the three months ended Oct. 29, lower than two analysts' projections for $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 $7 billion and whose stock is notoriously volatile.

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. Making matters worse, GameStop's retail business was quashed during Covid lockdowns and results have been further hampered by supply constraints on consoles. And the broader gaming industry is in decline, with overall spending down 5% in the third quarter from a year earlier, according to industry researcher NPD Group.

Software sales declined 19% in the quarter to $352.1 million, while hardware and accessories sales fell 6.4% to $627 million. Collectibles were a bright spot, gaining 7.9% to $207.3 million.

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 US 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 $9 billion of liabilities, sending the crypto market into a tailspin.

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. The shares, which are down 40% this year, fluctuated after the report and were up about 1% in extended trading Wednesday.

(Updates with sales breakdown in penultimate paragraph, updates shares.)

Most Read from Bloomberg Businessweek

  • Airbus Is Coming for Boeing's 737

  • The Viral List That Turned a Yale Professor Into an Enemy of the Russian State

  • The Cult of the Retail Trader Has Fizzled

  • The Club With a 60,000-Woman Waitlist

  • Twitter Under Elon Musk Still Has to Live in Apple's World

©2022 Bloomberg L.P.

COMMENTS

More Related News

US Offices Reach 50% Occupancy for First Time Since Pandemic Hit
US Offices Reach 50% Occupancy for First Time Since Pandemic Hit

(Bloomberg) -- More than half of workers in major US cities went to the office last week, the first time that return-to-office rates crossed 50% of their pre...

J&J Can
J&J Can't Use Bankruptcy to End Cancer Suits Over Baby Powder, Court Says

(Bloomberg) -- Johnson & Johnson can't use bankruptcy to resolve more than 40,000 cancer lawsuits over its baby powder, a federal appeals court ruled. Most...

UK Firefighters to Strike Over Pay, First Time in 20 Years
UK Firefighters to Strike Over Pay, First Time in 20 Years
  • World
  • 2023-01-30 17:11:15Z

(Bloomberg) -- UK firefighters voted to strike over pay and conditions, adding to a snowballing wave of industrial unrest that's swept through the British...

Power Crisis Triggers Water Cuts in South Africa
Power Crisis Triggers Water Cuts in South Africa's Economic Hub
  • World
  • 2023-01-30 12:46:16Z

(Bloomberg) -- Parts of Johannesburg, South Africa's economic hub, are being subjected to renewed water-supply cuts as ongoing electricity shortages disrupt ...

Malaysia PM Anwar Tells Goldman to Pay Up on 1MDB Settlement
Malaysia PM Anwar Tells Goldman to Pay Up on 1MDB Settlement
  • World
  • 2023-01-30 12:42:09Z

(Bloomberg) -- Malaysian Prime Minister Anwar Ibrahim demanded that Goldman Sachs Group Inc. honor its settlement with the government for its role in the...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business