GameStop (GME) Q2 2022 Profit
SAN RAPHAEL, CA – DECEMBER 8: Shoppers enter the GameStop store on December 8, 2021 in San Rafael, California. Video game retailer GameStop will report third-quarter earnings after the close of trading today. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan | News Getty Images | Getty Images
GameStop said on Wednesday that quarterly sales declined and losses widened as its inventory of video game hardware and more increased.
The company also disclosed new partnership with the FTX crypto exchange.
The company’s shares rose about 10% after hours.
In the second fiscal quarter ending July 30, the video game retailer’s total sales fell to $1.14 billion from $1.18 billion last year. Its loss widened to $108.7 million, or 36 cents a share, from a loss of $61.6 million, or 21 cents, a year earlier.
GameStop’s results can’t be compared to estimates because too few analysts cover the company.
Inventories rose to $734.8 million at the end of the quarter. This is more than $596.4 million at the end of the second quarter of last year. The company said in a press release that it deliberately increased the volume of goods to keep up with consumer demand and deal with supply chain challenges.
The company did not provide a forecast. He has not issued instructions since the start of the pandemic.
An outdated video game retailer is trying to adapt its business to the digital world. It has new leadership, including chairman Ryan Cohen, founder of Chewy and former activist investor Bed Bath & Beyond, and its CEO Matt Furlong, an Amazon veteran.
But GameStop struggled to increase profits, which led to cost cuts and a change in management. Last month, the company fired its chief financial officer, Mike Recupero, and laid off employees from various departments. Accounting Director Diana Jage has taken over as the company’s new CFO.
The company was looking for new ways to earn money, including non-fungible tokens. In July, the company launched an NFT trading platform. open to the public for beta testing. It 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.
As sales generally declined, GameStop indicated some new ventures were on the rise. Sales related to collectibles rose from $177.2 million in the second quarter of last year to $223.2 million in the latest quarter.
NFTs are traded on FTX, the retailer’s new partner. “In addition to partnering with FTX on new e-commerce and online marketing initiatives, GameStop will begin selling FTX gift cards at select stores,” GameStop said in a statement.
FTX was founded three years ago by 30-year-old billionaire former Wall Street trader Sam Bankman-Freed. He has become a lender of last resort for crypto firms that have struggled as assets have dwindled since the end of last year.
The agreement with FTX appears to affect GameStop’s status as a meme fund.
The value of the company’s shares fluctuated sharply. Over the past year, the share price has risen from $19.39 to $63.92. The company’s shares have fallen about 36% this year, bringing the company’s value to $7.31 billion.
Read the GameStop earnings report here.
This is an evolving story. Keep for updates.