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GameStop (GME) Down on Q4 Loss, Sales Beat Estimates
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Shares of GameStop Corp. (GME - Free Report) fell more than 8% in the after-hours trading session on Mar 17, following its fourth-quarter fiscal 2021 results. While the top line beat the Zacks Consensus Estimate and grew year over year, the bottom line lagged the same.
Consequently, the stock plunged 48.9% in the past three months compared with the industry’s decline of 14.3%.
Nevertheless, management is progressing well on its growth endeavors and maintaining a sturdy balance sheet. This Zacks Rank #3 (Hold) company has been increasing its product catalog across consumer electronics, PC gaming and refurbished hardware.
Moving on, GME joined hands with Immutable X in a bid to support the development of GameStop’s NFT marketplace. This move will provide up to $150 million in IMX tokens post the achievement of certain milestones. Also, the company launched a redesigned app, with improved user interface, better scalability for a larger product catalog and enhanced functionality to support exclusive offers and promotions.
Image Source: Zacks Investment Research
Q4 in Details
GameStop posted an adjusted loss of $1.86 per share, which lagged the Zacks Consensus Estimate of an earnings of 77 cents. In the year-ago quarter, the company had reported adjusted earnings of $1.34.
The video game retailer reported net sales of $2,253.9 million, which surpassed the Zacks Consensus Estimate of $2,189 million. The metric also rose 6.2% year over year and 2.7% on a two-year basis.
Management highlighted that new and expanded brand relationships with Alienware, Corsair and Lenovo contributed to the company's growth. The company’s focus on front-loading investments in inventory is helping it to meet sturdy demand and mitigate supply chain challenges.
During the quarter, GME witnessed a hike in Grew PowerUp Rewards Pro members by 32% year over year. This took the total membership to nearly 5.8 million.
By sales mix, hardware and accessories sales increased 2.2% to $1,188.7 million. Software sales grew 7.5% to $785.9 million, while collectibles sales rose 22.4% to $279.3 million.
Margins
Gross profit decreased 15.7% year over year to $378.2 million, while gross margin contracted 430 basis points (bps) to 16.8%.
Adjusted SG&A expenses jumped 28.4% to $538.9 million during the quarter. As a percentage of net sales, adjusted SG&A expenses expanded 410 bps to 23.9% during the quarter under review from 19.8% in the year-ago period.
The company’s adjusted operating loss was $160.7 million in the reported quarter. It had reported adjusted operating earnings of $28.9 million in the prior-year quarter. Adjusted EBIDTA loss was $126.9 million against adjusted EBIDTA earnings of $50.3 million in the prior-year quarter.
GameStop ended fiscal 2021 with cash and cash equivalents of $1,271.4 million, restricted cash of $33.1 million and stockholders’ equity of $1,602.5 million. The company had no debt other than a $44.6 million low-interest, unsecured term loan associated with the French government’s response to the pandemic.
During the fourth quarter, cash used in operating activities were $110.3 million versus an inflow of $164.8 million in the year-ago quarter. Capital expenditures in the fourth quarter amounted to $21.3 million. Inventory was $915 million at the end of fiscal 2021 compared with $602.5 million at the close of the prior year.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.
Tapestry presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.
Target currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.
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GameStop (GME) Down on Q4 Loss, Sales Beat Estimates
Shares of GameStop Corp. (GME - Free Report) fell more than 8% in the after-hours trading session on Mar 17, following its fourth-quarter fiscal 2021 results. While the top line beat the Zacks Consensus Estimate and grew year over year, the bottom line lagged the same.
Consequently, the stock plunged 48.9% in the past three months compared with the industry’s decline of 14.3%.
Nevertheless, management is progressing well on its growth endeavors and maintaining a sturdy balance sheet. This Zacks Rank #3 (Hold) company has been increasing its product catalog across consumer electronics, PC gaming and refurbished hardware.
Moving on, GME joined hands with Immutable X in a bid to support the development of GameStop’s NFT marketplace. This move will provide up to $150 million in IMX tokens post the achievement of certain milestones. Also, the company launched a redesigned app, with improved user interface, better scalability for a larger product catalog and enhanced functionality to support exclusive offers and promotions.
Image Source: Zacks Investment Research
Q4 in Details
GameStop posted an adjusted loss of $1.86 per share, which lagged the Zacks Consensus Estimate of an earnings of 77 cents. In the year-ago quarter, the company had reported adjusted earnings of $1.34.
The video game retailer reported net sales of $2,253.9 million, which surpassed the Zacks Consensus Estimate of $2,189 million. The metric also rose 6.2% year over year and 2.7% on a two-year basis.
Management highlighted that new and expanded brand relationships with Alienware, Corsair and Lenovo contributed to the company's growth. The company’s focus on front-loading investments in inventory is helping it to meet sturdy demand and mitigate supply chain challenges.
During the quarter, GME witnessed a hike in Grew PowerUp Rewards Pro members by 32% year over year. This took the total membership to nearly 5.8 million.
By sales mix, hardware and accessories sales increased 2.2% to $1,188.7 million. Software sales grew 7.5% to $785.9 million, while collectibles sales rose 22.4% to $279.3 million.
Margins
Gross profit decreased 15.7% year over year to $378.2 million, while gross margin contracted 430 basis points (bps) to 16.8%.
Adjusted SG&A expenses jumped 28.4% to $538.9 million during the quarter. As a percentage of net sales, adjusted SG&A expenses expanded 410 bps to 23.9% during the quarter under review from 19.8% in the year-ago period.
The company’s adjusted operating loss was $160.7 million in the reported quarter. It had reported adjusted operating earnings of $28.9 million in the prior-year quarter. Adjusted EBIDTA loss was $126.9 million against adjusted EBIDTA earnings of $50.3 million in the prior-year quarter.
GameStop Corp. Price, Consensus and EPS Surprise
GameStop Corp. price-consensus-eps-surprise-chart | GameStop Corp. Quote
Other Financial Aspects
GameStop ended fiscal 2021 with cash and cash equivalents of $1,271.4 million, restricted cash of $33.1 million and stockholders’ equity of $1,602.5 million. The company had no debt other than a $44.6 million low-interest, unsecured term loan associated with the French government’s response to the pandemic.
During the fourth quarter, cash used in operating activities were $110.3 million versus an inflow of $164.8 million in the year-ago quarter. Capital expenditures in the fourth quarter amounted to $21.3 million. Inventory was $915 million at the end of fiscal 2021 compared with $602.5 million at the close of the prior year.
Stocks to Consider
Here are three other better-ranked stocks to consider — Nordstrom (JWN - Free Report) , Tapestry (TPR - Free Report) and Target (TGT - Free Report) .
Nordstrom presently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 13.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.
Tapestry presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.
Target currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.