GameStop Corp (NYSE: GME) on Wednesday said its sales in the fiscal third quarter topped Wall Street estimates. The stock still slid more than 6.0% in extended trading as shareholders focused more on the larger-than-expected quarterly loss.
Anthony Chukumba’s remarks on CNBC’s ‘Closing Bell’
On CNBC’s “Closing Bell”, Loop Capital’s Anthony Chukumba expressed disappointment in the earnings press release, particularly as it did not offer insight into the company’s strategy moving forward.
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Sales were strong and ahead of the consensus, but that’s to be expected since we’re very early in the new video game console cycle. But the bigger issue here is that they lost a lot more money than investors were expecting. The press release was literally six bullet points. It didn’t offer any insight into what the strategy is to turn this business around.
Also on Wednesday, GameStop said the U.S. SEC issued a subpoena in August asking the company for additional documents related to its investigation on GME trading.
Key takeaways from GameStop’s Q3 earnings report
GameStop reported $105.4 million in loss for Q3 that translates to $1.39 per share. In the comparable quarter of last year, its loss was capped at $18.8 million only or 29 cents per share.
At $1.3 billion, the video gaming merchandise retailer noted a 30% annualised growth in its sales, as per the earnings press release. According to FactSet, experts had forecast 52 cents of per-share loss on $1.19 billion in sales.
GameStop attributed its Q3 loss partially to increased spending on inventory to mitigate supply constraints and meet higher demand in the holiday season. The speciality retailer had $1.141 billion worth of inventory at the end of Q3.
Higher sales were thanks to its partnerships with several brands, including Vizio, Razer, LG, and Samsung. GameStop had $1.41 billion in cash and equivalents at the end of Q3 with a low-interest, unsecured loan worth $46.2 million.
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