GameStop Corp. stock jumped 48% in the extended session on Tuesday after the specialty retailer reported surprising quarterly earnings and sales that were above Wall Street expectations.
“The retailer is firmly focused on improving profitability year-over-year while continuing to deliver long-term business growth,” CEO Matt Furlong said on a company conference call after the results.
It earned $48.2 million, or 16 cents per share, in the fourth quarter, versus a loss of $147.5 million, or 49 cents per share, in the year-ago quarter.
Sales decreased slightly to $2.23 billion from $2.25 billion a year ago in the fourth quarter of the previous year.
Analysts polled by FactSet expected the video game retailer to report an adjusted loss of 13 cents per share on sales of $2.18 billion.
GameStop said it trimmed its inventory to $682.9 million at the end of the quarter, compared to $915 million at the end of the fourth quarter of 2022.
The company said this reflects its “continued focus on maintaining a good inventory position”.
GameStop said it has completed most of its upgrades related to infrastructure, systems, shipping capabilities, and online and mobile platforms.
On the call with analysts after the results, Furlong said the company is taking steps this fiscal year to improve efficiency and reach profitability targets.
He said that includes continuing to cut costs, including in Europe, taking advantage of GameStop’s “enhanced financial position” to continue to improve terms from suppliers, and getting its full allocation of consoles to meet demand.
Furlong said building a “stronger presence” in high-margin categories like collectibles and toys, where the company is also seeing “pockets of growth,” is also on the cards.
“GameStop is much healthier today than it was at the start of 2021,” said GameStop CEO.
GameStop stock ended the regular trading day up 4.6%, gaining about 12% in the four days since closing at a two-year low.
GameStop has reported larger-than-expected losses in three of the past four quarters, but the stock has gained the day after each of the past four reports, an average of 8.2%, according to FactSet data.
The one-time meme stock has lost about 13% over the past three months, while the S&P 500 has lost ground