On Wednesday, GameStop Corporation
Second Quarter Highlights
During the quarter that ended on July 29th, GameStop reported its revenue rose about 2% to $1.16 billion, topping $1.14 billion that three analysts polled by LSEG estimated. The Texas-based company attributed the rise in revenue to "significant software release" along with increased sales of new gaming hardware in several international segments. Software and collectibles sales made about 49% of total revenue, while the remaining half was made of hardware sales that remained flat. However, software sales rose 25% but they were offset by a 24% decline in collectibles.
With efficient cost-cutting efforts, GameStop reduced its selling, general and administrative expenses to $322.5 million, making 27.7% of net sales while during last year's comparable quarter, these expenses amounted to $387.5 million, making up about 34.1% of net sales. But GameStop also had transition costs $4.3 million from its store closures in Europe where it has been lowering its footprint as Cohen steered the company away from physical stores to an increased digital presence in an effort to rebound from the recent sales slump caused by console users and gamers downloading games over the internet instead of buying hard copies that GameStop sells. Also, publishers have been releasing more free games to attract smartphone and tablet gamers and altered their revenue models to rely more on advertising and sales of virtual goods.
Intense Dynamics Is In The Air At The Gaming World
Gaming has even taken center stage at Microsoft that is trying to finalize its $68.7 billion acquisition of Activision Blizzard. Although the deal has encountered several regulatory setbacks, it is getting closer to a close. Together, Microsoft and Activision Blizzard agreed to push the deadline to complete the deal to October 18th. Last month, Microsoft submitted a proposal to the U.K.'s Competition and Markets Authority with which it agrees to transfer cloud streaming rights to PC and console games that Activision Blizzard published to Ubisoft for 15 years, in case the acquisition goes through.
Meanwhile, one of the world's largest publishers, Electronic Arts, is focusing on growing its existing franchises and disproportionately invest in its successful IPs to create a new world that generates more engagement. Electronic Arts CEO Andrew Wilson spoke at a recent conference, and although many of its franchises like The Sims, Madden and Battlefield already boast substantial communities, Wilson expressed particular enthusiasm around the FIFA franchise that is in for rebranding with the launch of EA Sports FC 24. The purpose of this move is to empower Electronic Arts to go beyond the game as the rebranding is expected to open new collaboration and expansion opportunities: from welcoming commercial partners to expanding into football-related ventures, as well as operating at a faster pace.FIFA 23 already achieved impressive engagement levels that resulted in record-breaking sales and increased playtime.
Meanwhile, GameStop's Corporate Structure Is Still In The Works
As a result of the shake up in the gaming universe, GameStop CFO stepped down last month after the board ousted the fifth CEO in five years back in June. But Ryan Cohen, now executive chairman and company's largest shareholder, seems to have a good game plan in the works. Mark H. Robinson, general counsel and secretary, took on additional roles of general manager and principal executive director and Daniel Moore has been appointed as principal accounting officer and interim principal financial officer. Back in January, GameStop came back to quarterly profit after seven straight quarter of losses, and now it continues its turnaround journey without a CEO and CFO as no new executive appointments have been announced during the quarterly report and there won't be a conference call.
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