GameStop Q3 sales plunge 20%; expects more store closures
Game Stop Corp. reported a third-quarter profit amid cost-cutting efforts even as its sales continued to decline.
As has been its policy, the long-struggling retailer did not hold a conference call in conjunction with its earnings report. But in a filing with the Securities and Exchange Commission, GameStop said its comprehensive store portfolio optimization review is ongoing.
“While a specific set of stores has not been identified for closure, we anticipate that it [the review] may result in the closure of a larger number of stores than we have closed in the past few years,” the company said.
GameStop is also shrinking its footprint in global markets. During the third quarter, the company initiated a plan to wind down operations in Germany, with store operations scheduled to end by the close of the fiscal year. It also initiated a plan to divest our operations in Italy.
Net income rose to $17.4 million in the quarter ended Nov. 2, compared to a net loss of $3.1 million in the year-ago quarter. Adjusted earnings came to $0.06 cents a share, better than the loss of $0.03 a share analysts had expected.
Net sales fell 20% to $860 million, compared to $1.078 billion in the prior year's third quarter. Hardware and accessory sales fell 28% to $417 million and software fell 15% to $271.8 million. Collectibles were down 3.7% to $171.1 million. Selling, general and administrative expenses fell to $282.0 million from $296.5 million last year.
GameStop ended the quarter with cash, cash equivalents and marketable securities of $4.616 billion, up from $929.2 million at the end of the same period last year.
The retailer said that it completed its previously disclosed “at-the-market” equity offering during the third quarter by selling 20 million shares of its common stock for approximately $400 million.
“The company does not anticipate any further at-the-market offerings involving the offer and sale of its common stock during the current fiscal year,” GameStop said in a statement.
