Video game retailer GameStop Corp. (GME, Financial) posted losing numbers for its holiday quarter, but its turnaround strategy continues.
Executives are planning to roll out a marketplace for non-fungible tokens by the end of this year’s second quarter. It is also introducing a redesigned app, working to increase its rewards program and collaborating with PC gaming brands.
CEO Matt Furlong said during an earnings call that management’s plan to once again become a “customer-obsessed technology company” is still in its early stages.
“It is important to stress the GameStop had become such a cyclical business and so capital starved that we have had to rebuild it from within," he said. "We’ve also had to change the way we assess revenue opportunities by starting to embrace, rather than run from, the new frontiers of gaming.”
Challenges remain, some of them fundamental. GameStop “sells videogames. It sells other stuff, but walk into one of its stores and look around and you still see walls of videogames,” noted TheStreet.com. “The problem -- and it's a very big one -- is that anyone who owns a Microsoft (MSFT, Financial) Xbox or Sony (SONY, Financial) Playstation can download videogames right from their console. That leaves GameStop in the business of selling something that people can literally buy without leaving the house.”
GameStop shares ended after-hours trading on Friday at $90, down 0.87%, or 79 cents per share. The Grapevine, Texas-based company released financial results for the fourth quarter and fiscal year ended Jan. 29 on Thursday.
During the fourth quarter, GameStop generated net sales of $2.254 billion, compared to $2.12 billion in the same period of 2020 and $2.19 billion in the final quarter of 2019. It also established new and expanded brand relationships, including with PC gaming companies such as Alienware, Corsair (CRSR, Financial) and Lenovo (LNVGY, Financial), that contributed to sales growth in the quarter.
The company also reported that it grew PowerUp Rewards Pro members by 32% on a year-over-year basis, taking total membership to approximately 5.8 million, and entered into a partnership with Immutable X that is intended to support the development of GameStop’s NFT marketplace and provide the company with up to $150 million in IMX tokens upon achievement of certain milestones.
In addition, management launched a redesigned app, which includes an enhanced user interface, improved scalability for a larger product catalog and more functionality to support exclusive offers and promotions. The company also hired dozens of additional individuals with experience in areas such as blockchain gaming, e-commerce and technology, product refurbishment and operations.
For full-year 2021, GameStop notched net sales of $6.01 billion, compared to $5.09 billion for 2020, the company reported. It expanded the product catalog to include a broader set of consumer electronics, PC gaming equipment and refurbished hardware as well as made “significant and long-term” investments in the company’s fulfillment network, systems and teams.
The company ended the fiscal year with $1.271 billion in cash and cash equivalents and $915 million in inventory, compared to $635 million in cash and $602.5 million in inventory at the end of 2020. The increased investments in inventory reflected the company’s focus on meeting heightened demand and mitigating supply chain headwinds.
GameStop reported that it established new offices in Seattle and Boston, which are technology hubs with established talent markets, raised more than $1.67 billion in capital and eliminated all of the company’s long-term debt, other than a $44.6 million low-interest, unsecured term loan associated with the French government’s response to Covid-19.
