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| GameStop reports surprise quarterly profit, sees higher sales, stock jumps nearly 50% |
GameStop, the specialty retailer of video games and related merchandise, announced better-than-expected quarterly earnings, which led to a surge in its stock price by almost 50% in extended trading on Tuesday. GameStop earned $48.2 million, or 16 cents per share, in the fourth quarter of 2022, compared to a loss of $147.5 million, or 49 cents per share, in the previous year's fourth quarter. Meanwhile, sales slightly decreased to $2.23 billion from $2.25 billion. Analysts had expected the company to report an adjusted loss of 13 cents per share on sales of $2.18 billion. The retailer's trimmed inventory to $682.9 million at the close of the quarter indicated that the company was maintaining a healthy inventory position.
The positive quarterly earnings were attributed to the company's focus on improving year-over-year profitability while still pursuing long-term growth. The company completed most of its infrastructure, systems, shipping capabilities, and online and mobile platform upgrades, which helped streamline the company's operations. GameStop also aimed to improve efficiency and reach profitability goals by cutting costs, including in Europe, and strengthening its financial position to improve terms from suppliers. The company planned to build a stronger presence in high-margin categories, such as collectibles and toys, where it is seeing pockets of growth.
GameStop has reported wider-than-expected losses in three of the past four quarters. However, the stock has gained the day after each of the past four reports, according to FactSet data. The company's stock price ended the regular trading day up 4.6% and has gained about 12% in the four days since it closed at a two-year low. The stock has lost about 13% over the past three months, while the S&P 500 index has gained 2.6%. The CEO of GameStop, Matt Furlong, stated that the company was a much healthier business today than it was at the beginning of 2021.
