Shares of the video game retailer plunged more than 11 percent in late trading after it said the pandemic negatively impacted its brick-and-mortar business in the fourth-quarter, including the all-important holiday sales season.
GameStop reported a 3.3 percent slide in revenue for the 13 weeks ending Jan. 30 to $2.12 billion from $2.19 billion. Wall Street had been expecting sales of $2.21 billion.
The company reported a quadrupling of its net income of $80.5 million, or $1.19 a diluted share, but it was helped by helped by an income-tax benefit and still fell short of analysts’ expectations of $1.35 a share.
In an effort to turn its business around, however, GameStop announced a series of high-profile executive appointments, the most prominent of which was Jenna Owens, a former Amazon and Google exec who has been tapped as the retailer’s chief operating officer.
The mixed news sent shares of the Grapevine, Texas, retailer on a rollercoaster ride after hours, first rising around 8 percent before cratering over 11 percent, which represented a loss of about $20 a share from its closing price of $181.75.
GameStop has also hired Neda Pacifico, a former executive of Amazon and Chewy.com, as senior vice president of e-commerce. It tapped Ken Suzuki from Zulily as its vice president of supply-chain systems.
The new executives all begin on March 29, GameStop said in reporting its fourth-quarter results.
The hectic trading frenzy catapulted GameStop’s stock, which had been trading at under $5 a share just last year, to a high of $347.51 on Jan. 27. It’s come down in recent weeks but has still hovered around $200, or more than 10 times as it was at the start of the year.
But the company’s financial results have yet to catch up to the stock as it grapples with the challenges created by the pandemic and other long-term industry challenges, such as waning foot traffic in brick-and-mortar stores.
On Tuesday’s call with investors, GameStop Chief Executive Officer George Sherman dubbed 2020 “unprecedented” and said that the company had to shutter 693 stores during the year. While the store closures helped the company shore up $400 million in costs, it also was a clear message to the retailer that it had to shift its focus to e-commerce and improved technology.
“Our emphasis in 2021 will be on improving our e-commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue,” said Sherman. The CEO did not take questions from investors, as is customary for most earnings calls.
Since Cohen joined GameStop’s board in January, the 35-year-old entrepreneur has reportedly been obsessing about customer service, contacting customers late into the night to solicit feedback, pushing to upgrade the company’s Web site.
In order to strengthen GameStop’s customer service, Cohen hired Kelli Durkin, who spearheaded initiatives at Chewy that included written personal notes to customers, as the retailer’s new senior vice president of customer care.
Source: New York Post