By Zaheer Kachwala
(Reuters) -GameStop reported a third-quarter profit on Tuesday as the videogame retailer ramps up its cost-saving efforts, including shutting stores and selling higher-margin goods.
CEO Ryan Cohen told investors in June the company would operate with “a smaller network and more value-added” items as a part of its attempt to boost sales and profitability.
This helped GameStop report a net income of $17.4 million in the third quarter, compared with a net loss of $3.1 million a year ago.
Its shares were up more than 2% in extended trading.
The company has been grappling with a slower turnaround of its main business as it struggles to ramp up sales of videogame hardware and collectibles, while facing stiff competition from online retail giants such as Amazon.com and eBay.
It is also burdened by an uncertain macroeconomic environment, as consumers cut back on discretionary spending owing to stubborn inflation and a slow recovery in the gaming market.
Wedbush Securities analyst Michael Pachter said he does not see any signs the company’s “core business is salvageable”.
“There is no turnaround, just stock sales to willingly foolish investors,” Pachter said.
Its shares have rallied more than 50% this year after stock influencer Keith Gill, also known as “Roaring Kitty”, reemerged earlier in 2024, sparking excitement among his followers.
The company has taken advantage of the jump in its stock price by raising around $3 billion earlier this year through share sales.
Gill was a key figure in the meme-stock frenzy of 2021, in which GameStop stock surged 1,600% at one point in January that year, crushing hedge funds that had bet against the videogame retailer.
GameStop’s third-quarter revenue fell 20% to $860 million, compared with $1.08 billion a year ago.
Cash and cash equivalents at the end of the third quarter were $4.58 billion, compared with $4.19 billion in the preceding three-month period.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Pooja Desai)
