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It seems that GameStop Corp.’s (GME - Free Report) effort to turn its fate around will take some more time, as the company reported another quarter of loss. The beleaguered video-game retailer posted a wider-than-expected loss in the first quarter of fiscal 2022. Also, the loss widened from the year-ago period.
However, focus on expanding product selection, improving delivery speeds, and enhancing in-store and online shopping experience helped post decent top-line number that not only beat the Zacks Consensus Estimate but also improved year over year.
GameStop has been taking initiatives to diversify business and become a technology-driven organization. The company has been pursuing growth opportunities in cryptocurrency, non-fungible tokens (NFTs) and Web 3 gaming verticals.
The Grapevine, TX-based company recently launched a digital asset wallet to allow gamers and others to store, send, receive and use cryptocurrencies and NFTs across decentralized apps without leaving their web browsers. The digital wallet will facilitate transactions on GameStop’s NFT marketplace, expected to be launched in the second quarter.
Q1 in Details
GameStop posted an adjusted loss of $2.08 per share in first-quarter fiscal 2022, wider than the Zacks Consensus Estimate of a loss of $1.37. In the year-ago quarter, the company had reported adjusted loss of 45 cents a share.
The company reported net sales of $1,378.4 million, which surpassed the Zacks Consensus Estimate of $1,353 million. The metric rose 8% year over year. Management highlighted that new and expanded brand relationships contributed to the company's growth.
By sales mix, hardware and accessories sales declined 4.2% to $673.8 million. Software sales grew 21.6% to $483.7 million, while collectibles sales surged 25.9% to $220.9 million.
Gross profit decreased 9.6% year over year to $298.5 million, while gross margin contracted 420 basis points (bps) to 21.7%.
Adjusted SG&A expenses jumped 28.6% to $452.2 million during the quarter. As a percentage of net sales, adjusted SG&A expenses increased 530 bps to 32.8% during the quarter under review from 27.5% in the year-ago period.
The company’s adjusted operating loss was $153.7 million in the reported quarter. It had reported adjusted operating loss of $21.6 million in the prior-year period. Adjusted EBIDTA loss was $125.5 million compared with adjusted EBIDTA loss of $0.7 million in the prior-year quarter.
Other Financial Aspects
GameStop ended the quarter with cash and cash equivalents of $1,035 million, restricted cash of $33.3 million and stockholders’ equity of $1,450.7 million. Inventory was $917.6 million at the end of the reported quarter compared with $570.9 million at the close of the prior year. The company is maintaining high inventory to meet increased customer demand and mitigate supply chain challenges.
During the first quarter, cash flow from operations was an outflow of $303.9 million, compared with an outflow of $18.8 million during the same period last year. Capital expenditures in the quarter amounted to $10.8 million.
Shares of this Zacks Rank #3 (Hold) company have increased 2.6% in the past three months against the industry’s decline of 20.9%.
Steven Madden is a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Steven Madden’s current financial year revenues and EPS suggests growth of 15.2% and 19.6%, respectively, from the year-ago reported figure. SHOO has a trailing four-quarter earnings surprise of 44%, on average.
G-III Apparel designs, sources and markets apparel and accessories under owned, licensed and private label brands. The stock currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for G-III Apparel’s current financial year revenues and EPS suggests growth of 10% and 5.4%, respectively, from the year-ago reported figure. G-III Apparel has a trailing four-quarter earnings surprise of 160.6%, on average.
Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, carries a Zacks Rank #2. BOOT has an expected EPS growth rate of 20% for three-five years.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago period.
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GameStop (GME) Posts Wider-Than-Expected Q1 Loss, Sales Beat
It seems that GameStop Corp.’s (GME - Free Report) effort to turn its fate around will take some more time, as the company reported another quarter of loss. The beleaguered video-game retailer posted a wider-than-expected loss in the first quarter of fiscal 2022. Also, the loss widened from the year-ago period.
However, focus on expanding product selection, improving delivery speeds, and enhancing in-store and online shopping experience helped post decent top-line number that not only beat the Zacks Consensus Estimate but also improved year over year.
GameStop has been taking initiatives to diversify business and become a technology-driven organization. The company has been pursuing growth opportunities in cryptocurrency, non-fungible tokens (NFTs) and Web 3 gaming verticals.
The Grapevine, TX-based company recently launched a digital asset wallet to allow gamers and others to store, send, receive and use cryptocurrencies and NFTs across decentralized apps without leaving their web browsers. The digital wallet will facilitate transactions on GameStop’s NFT marketplace, expected to be launched in the second quarter.
Q1 in Details
GameStop posted an adjusted loss of $2.08 per share in first-quarter fiscal 2022, wider than the Zacks Consensus Estimate of a loss of $1.37. In the year-ago quarter, the company had reported adjusted loss of 45 cents a share.
The company reported net sales of $1,378.4 million, which surpassed the Zacks Consensus Estimate of $1,353 million. The metric rose 8% year over year. Management highlighted that new and expanded brand relationships contributed to the company's growth.
By sales mix, hardware and accessories sales declined 4.2% to $673.8 million. Software sales grew 21.6% to $483.7 million, while collectibles sales surged 25.9% to $220.9 million.
GameStop Corp. Price, Consensus and EPS Surprise
GameStop Corp. price-consensus-eps-surprise-chart | GameStop Corp. Quote
Margins
Gross profit decreased 9.6% year over year to $298.5 million, while gross margin contracted 420 basis points (bps) to 21.7%.
Adjusted SG&A expenses jumped 28.6% to $452.2 million during the quarter. As a percentage of net sales, adjusted SG&A expenses increased 530 bps to 32.8% during the quarter under review from 27.5% in the year-ago period.
The company’s adjusted operating loss was $153.7 million in the reported quarter. It had reported adjusted operating loss of $21.6 million in the prior-year period. Adjusted EBIDTA loss was $125.5 million compared with adjusted EBIDTA loss of $0.7 million in the prior-year quarter.
Other Financial Aspects
GameStop ended the quarter with cash and cash equivalents of $1,035 million, restricted cash of $33.3 million and stockholders’ equity of $1,450.7 million. Inventory was $917.6 million at the end of the reported quarter compared with $570.9 million at the close of the prior year. The company is maintaining high inventory to meet increased customer demand and mitigate supply chain challenges.
During the first quarter, cash flow from operations was an outflow of $303.9 million, compared with an outflow of $18.8 million during the same period last year. Capital expenditures in the quarter amounted to $10.8 million.
Shares of this Zacks Rank #3 (Hold) company have increased 2.6% in the past three months against the industry’s decline of 20.9%.
Stocks to Consider
Here we have highlighted three top-ranked stocks, namely, Steven Madden (SHOO - Free Report) , G-III Apparel (GIII - Free Report) and Boot Barn Holdings (BOOT - Free Report) .
Steven Madden is a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Steven Madden’s current financial year revenues and EPS suggests growth of 15.2% and 19.6%, respectively, from the year-ago reported figure. SHOO has a trailing four-quarter earnings surprise of 44%, on average.
G-III Apparel designs, sources and markets apparel and accessories under owned, licensed and private label brands. The stock currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for G-III Apparel’s current financial year revenues and EPS suggests growth of 10% and 5.4%, respectively, from the year-ago reported figure. G-III Apparel has a trailing four-quarter earnings surprise of 160.6%, on average.
Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, carries a Zacks Rank #2. BOOT has an expected EPS growth rate of 20% for three-five years.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago period.