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GameStop's (GME) New Facility in Reno to Boost Digital Growth

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GameStop Corp. (GME - Free Report) , which has been undertaking prudent efforts to transform business, announced entry into a lease for a 530,000-square feet facility in Reno, NV. The new facility is in sync with the company’s efforts to expand North American fulfillment network. The facility is expected to be operational by 2022.

Moreover, the new facility in Reno will position the company to grow product offerings as well as expedite shipping facilities across the west coast. Prior to this, the company entered into a lease for a 700,000-square feet facility in York, PA, which is expected to be operational by fourth-quarter fiscal 2021 and support fulfillment needs across the east coast. Owing to these expansions, the company’s fulfillment network spans across both coasts of Continental U.S.

GameStop has been gaining from continued growth in e-commerce. As part of its business transformation efforts, the company has been inclined toward expanding its online business. Its efforts to expand fulfillment centers will bolster e-commerce operating capacity and enhance services to customers.

Speaking of growth efforts, the company’s online wing has been gaining from investments toward boosting omni-channel capabilities. This includes enhanced fulfillment capabilities such as the roll-out of same-day delivery option as well as several flexible payment options. To further boost consumers’ shopping experience, the company improved search and navigation as well as post-purchase features. It also launched a new mobile app with improved features and flexible payment options. The company’s multi-year strategic deal with Microsoft, to provide customers with enhanced digital solutions, is encouraging.

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To fast-track digital growth and accelerate business transformation, GameStop has been restructuring its board. It also formed a Strategic Planning and Capital Allocation Committee. Since the formation of this committee, the company has appointed several board executives with significant experience in e-commerce, customer care and technology. In fact, under the leadership of board chairman Ryan Cohen, the company is undertaking efforts to turn its business around and transform into a customer-focused, online-oriented gaming company.

The company’s transformation initiatives are also backed by prudent fund-raising initiatives. Last month, it completed the sale of 5 million shares through its “at-the-market” equity offering program (the “ATM Offering”). It generated aggregate gross proceeds before commissions and offering expenses of approximately $1.13 billion. Prior to this, the company sold 3.5 million shares of its common stock through the ATM Offering and generated collective gross proceeds of roughly $551 million.

Notably, ATM Offerings helped this gaming retailer to leverage the massive price surge earlier this year, stemming from potential short-squeeze events. Markedly, GameStop is one of the first much-acclaimed Reddit-driven meme stocks. The company intends to use the fund raised through ATM offerings to support strategic growth endeavors as well as for general corporate purposes and strengthening balance sheet.  

In addition to these, the company is focusing on boosting assortments, especially in high margin product categories, private label and collectibles. It has also been progressing well with strategic store de-densification strategy.

Wrapping up, it has been quite an eventful year for GameStop, marked with phenomenal stock-price appreciation, radical board restructurings as well as embarking on prudent growth endeavors. While it remains to be seen how successful the company becomes, its efforts to evolve as a strong and digitally-advanced player in the gaming industry is laudable.

Shares of this Zacks Rank #3 (Hold) stock have skyrocketed 959.3% so far this year compared with the industry’s rise of 47.1%.

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