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Omar Venerio
Omar Venerio
Articles (1560) 

2 Stocks Post Strong Moves on Wednesday

GameStop falls, RH rises

September 11, 2019 | About:

Shares of GameStop Corp. (NYSE:GME) fell more than 10% on Wednesday after the company posted second-quarter results on Tuesday. Revenue declined 14% from the prior-year quarter to $1.29 billion, falling $50 million short of estimates. The company posted a loss of 32 cents per share, falling 10 cents short of estimates.

During the quarter, new hardware sales tumbled 41.1%, new software sales fell 5.3%, accessories sales decreased 9.5%, pre-owned sales declined 17.5%, digital receipts decreased 11.2% and collectibles sales grew 21.2%.

Further, the gross profit declined 15.1% to $399.1 million, while the gross margin fell 30 basis points to 31%. Selling, general and administrative expenses increased 4% to $459.3 million.

Looking ahead to full fiscal 2019, the company expects adjusted earnings per share between $1.15 and $1.30, down from the previous guidance of $2.14.

During the quarter ended June 30, Jim Simons (Trades, Portfolio)' Renaissance Technologies boosted its stake by 906% to 5,127,146 shares, while Leucadia National (Trades, Portfolio) sold out of the stock.

Shares of RH (NYSE:RH) advanced almost 5% on Wednesday despite reporting second-quarter revenue of $706.51 million and earnings of 50 cents per share, which topped analysts' estimates by $8.78 million and 22 cents.

In the second quarter, GAAP operating income grew 27% to $104 million and the adjusted operating income increased 39% to $105 million. The operating margin increased 190 basis points to 14.7%.

"Despite the increase in tariffs and some negative macro trends, we remain optimistic that our business momentum will continue, supported by a number of positive factors, including by the recent mailing of the Fall Interiors and soon to be in-home Modern Source Books, the increasing contribution from RH Beach House, the launch of RH Ski House and new Galleries opening this fall," Chairman and CEO Gary Friedman said.

Looking ahead to full-year 2019, the company expects revenue between $2.68 billion and $2.69 billion, up from the previous guidance of between $2.658 billion and $2.674 billion. It also projects diluted earnings per share of $10.53 to $10.76.

At the end of the second quarter, Simons' firm established a position, buying 73,500 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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