GameStop quarterly revenue beats estimates on higher demand for video games

GameStop had in May launched its digital asset wallet to store, send, receive and use cryptocurrencies and NFTs. PHOTO: REUTERS

BENGALURU (REUTERS) - Gamestop reported first-quarter revenue that exceeded market expectations on Wednesday (June 1), as the video game retailer pivots towards a more online-focused model amid increasing competition from large retailers such as Walmart and Amazon.com.

Store closures during the Covid-19 pandemic affected GameStop's physical retail business, for which it is primarily known. The company has been bolstering its online sales capabilities as shopping trends towards e-commerce, which accelerated during the pandemic.

GameStop had in May launched its digital asset wallet to store, send, receive and use cryptocurrencies and non-fungible tokens (NFTs). The wallet could also be used for transactions on GameStop's NFT marketplace, expected to go live later this year.

Wedbush analyst Michael Pachter called Gamestop's NFT marketplace announcement "nonsense", saying it will "have no NFTs for sale and no customers", and that the wallets it is providing "will be empty".

Mr Pachter added that there was no question-and-answer session in GameStop's earnings calls for several quarters in a row and no opportunity to seek clarity on its NFT marketplace product and strategy.

GameStop said its inventory in the quarter ended April 30 rose to US$917.6 million ($1.3 billion) from US$570.9 million a year earlier, amid higher customer demand and likelihood of supply chain disruptions.

Sales of software and collectibles contributed to more than 50 per cent of total quarterly revenue for the first time since the third quarter of 2020.

GameStop's shares soared 687 per cent last year as it was at the centre of a battle between retail investors coordinating on online forums and Wall Street hedge funds that had taken short positions in the company, in what is called a "short squeeze".

The company's net sales were US$1.38 billion in the quarter, above analysts' average estimate of US$1.32 billion, according to Refinitiv data.

Net loss for the company widened to US$157.9 million, or US$2.08 per share, for the first quarter, from US$66.8 million, or US$1.01 per share, a year earlier.

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