Gamestop’s Tumbling Ahead Of Highly-Anticipated Earnings Call

Gamestop’s Tumbling Ahead Of Highly-Anticipated Earnings Call

Update (1655ET): After the initial spike, investors are selling first ahead of the earnings call as hopes of a brave new world of digital GME fade…

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Gamestop’s Q4 earnings report, the most hotly anticipated corporate release of the week, have hit the tape, and although the company missed on top and bottom line projections, shares jerked higher in after-hours trading as the company announced a new COO and an improvement in e-commerce sales.

However, the report featured several red flags as well, including the company’s refusal to publish earnings guidance, and plans to withhold comps for 2021. But its decision to appoint seasoned tech executive Jenna Owens. According to the press release, Owens brings approximately two decades of technology, operations, fulfillment, and supply chain experience to Gamestop. Most recently, she was director and general manager for distribution and multi-channel fulfillment at Amazon.

Here’s a rundown of the key numbers courtesy of BBG:

Software net sales $731.2 million

Collectibles net sales $228.2 million

Gross profit margin 21.1%, estimate 26.1%

  • Adjusted EPS $1.34 vs. $1.27 y/y, estimate $1.43 (range 84c to $1.83)
  • Comparable sales +6.5% vs. -26.1% y/y, estimate +8.1% (Consensus Metrix, average of 7 estimates)
  • Net sales $2.12 billion, -3.3% y/y, estimate $2.24 billion (range $2.09 billion to $2.40 billion)
  • Hardware and Accessories net sales $1.16 billion
  • 4Q saw 175% increase in global E-Commerce sales and a $92.6 million reduction in SG&A
  • February comparable store sales increased 23%, led by continued strength in global hardware sales

Though the press release offered the expected boilerplate language on the company’s efforts to accelerate its turnaround plan, led by a new board of advisors.

“I am proud of how our entire organization came together in 2020 to adapt to the challenging pandemic environment, effectively serve our customers’ demand for gaming and entertainment products, and navigate through the year with strong liquidity and a strengthened balance sheet,” said CEO George Sherman. “The past year also saw us take steps to accelerate our de-densification efforts and streamline our store footprint, leverage our retail locations to provide same-day delivery and curbside pickups, and continue to enhance our suite of E-Commerce platforms.”

“We also added important experience to our board by appointing several new directors with backgrounds in corporate finance, E-Commerce and technology and subsequently established a strategy-focused committee to accelerate our transformation,” he added. “Our emphasis in 2021 will be on improving our E-Commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue.”

Investors will need to wait for the 1700ET earnings call for more insights on the company’s pivot to digital (while the above language sounds nice, it’s not exactly groundbreaking).

In a sign of just how eager retail traders are to hear more from the company’s new CEO (Chewy co-founder and major GME shareholder Ryan Cohen), the earnings call line is already full.

Tyler Durden
Tue, 03/23/2021 – 16:43

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