Meme stock mania is certainly not the same it was a year ago. On the same day GameStop Corporation
The Remake Of The Gaming Game
Even the gaming scenery is evolving. As sales of video games continue falling from month to month, there's the promise of cloud gaming, one that remains unfulfilled after already a decade of development. GameStop has intense competitors in this game, no other than titans themselves, Microsoft Corporation
GameStop's First Quarter Highlights
For the quarter that ended on April 29th, GameStop generated revenue of $1.24 billion, which is a drop compared to last year's comparable quarter when revenue amounted to $1.38 billion. The resulting net loss amounted to $50.5 million or 17 cents per share, which is an improvement from last year's Q1 when it amounted to $157.9 million, or 52 cents a share, showing that management is doing a good job at lowering costs. Selling, general and administrative expenses were lowered from $452.2 million in the year-ago quarter to $345.7 million for the quarter. Transactions costs from restructuring efforts amounted to $14.5 million and GameStop warned of further transaction charges in the undergoing quarter.
Although European sales expanded 26.2% YoY, revenue in the U.S. Canada and Australia tanked 16.4%, 18.5% and 8.9%, respectively. The drop was contributed to currency fluctuations, fewer significant gaming title launches and soft sales in pre-owned software and hardware and collectibles where the company has the potential for long-term growth. The collectibles unit contracted from last year's Q1 when revenue amounted to $220.9 million to $173 million it generated during this year's first quarter.
Firing Of The CEO
The decision to part ways with Furlong comes only months after GameStop reported its first quarterly profit in two years which is when Furlong got behind the wheel to execute the company's turnaround. The ex Amazon.com Inc
All in all, if sales of video games continue to fall, management needs to continue lowering costs so GameStop can remain in the game. But if GameStop wants to play for keeps, it will need to show more of that long-term value creation.
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