GameStop posts quarterly loss on supply issues, Omicron hit
(Reuters) – Video game retailer GameStop Corp reported a net loss for the fourth quarter on Thursday as it absorbed high costs from supply constraints and also increased spending to pivot its largely brick business and mortar towards e-commerce.
Shares of the company, which was at the heart of the 2021 meme stock saga, fell 7% in extended trading.
“The combination of supply chain issues and the Omicron variant had a huge impact on last year’s holiday season,” chief executive Matt Furlong said on an earnings conference call.
Usually, the holiday quarter is strong for the company as new Xboxes and Playstations are launched and demand is high. But component shortages and other supply chain issues, which had plagued console makers like Sony and Microsoft, impacted GameStop’s business.
Like many other retailers, GameStop has already suffered from the pandemic which has taken its toll with restrictions leading to store closures. The spread of the Omicron variant further aggravated the situation.
The company’s net sales rose 6.2% to $1.88 billion, while its gross profit fell 15.7% in the quarter ended Jan. 29.
Wedbush Securities analyst Michael Pachter noted that the company’s gross profit fell “due to exceptionally low gross margins.”
“It’s likely that used game sales were weak and the margin was lower than normal and hardware sales were higher than normal.”
GameStop has also increased spending to hire talent, increase capacity, expand its e-commerce presence, and also introduce new products to boost its digital presence.
The company also announced on Thursday that it intends to launch its marketplace for non-fungible tokens, or NFTs, by the end of the second quarter of fiscal 2022.
The company posted a net loss of $147.5 million, or $1.94 per share, in the quarter, compared to profit of $80.5 million, or $1.19 per share, a year earlier. early.
Reporting by Tiyashi Datta and Chavi Mehta in Bengaluru; Editing by Shailesh Kuber