GameStop swings to Q2 profit but sales plummet 30%; warns of more store closings
GameStop Corp. reported another quarter of disappointing revenue even as it swung to a surprise profit amid reduced costs.
In a filing with the Securities and Exchange Commission, the long-struggling video game retailer said it has initiated a store portfolio optimization review which involves identifying stores for closure based on many factors, including an evaluation of current market conditions and individual store performance. GameStop said it expects that the review may result in the closure of a larger number of stores than it has closed in the past few years.
The company also disclosed an “at-the-market” stock offering of up to 20 million shares, which represents 4.7% of the total shares outstanding. GameStop said it plans to use the proceeds from the offering for general corporate purposes, “which may include acquisitions and investments in a manner consistent with our investment policy."
[READ MORE: GameStop Q1 sales plummet; to sell more stock]
GameStop reported net income of $14.8 million, or $0.04 a share, in the quarter ended Sept. 10, compared to a loss of $2.8 million, or $0.01 a share, in the year-ago period. Adjusted earnings were $0.01 a share, beating analysts’ estimates of a loss of $0.09 a share. Selling and administrative expenses decreased 16% during the quarter.
Net sales fell to $0.798 billion, down from $1.164 billion in the previous year’s quarter. For its first quarter, ended May 4, sales fell 29% to $881.8 million. GameStop has been challenged in recent years amid a consumer shift to downloading games and purchasing games online.
The company ended the quarter with cash, cash equivalents and marketable securities of $4.204 billion, up from $1.195 billion at the end of the same period last year.
GameStop did not hold a conference call in conjunction with its earnings report.
