Video game retailer GameStop underwhelmed investors in its first earnings report since the company became the darling of day traders in a Reddit-fueled stock-buying frenzy in January.
GameStop saw $80.5 million in income and $2.1 billion in sales revenue in the fourth quarter of 2020, coming in just under analysts’ expectations. The company’s sales revenue for the period ended January 30 represented a 3% decline over the same time period a year ago.
Shares of the Grapevine, Texas-based video game retailer were still up 900% at the end of last week, closing at $201.75 Thursday. But shares fell 12% over the course of trading Tuesday closing at $181.75 and the price continues to fall in after hours trading.
The retailers’ stock performance has been so hyped that its earnings report webcast hit capacity Tuesday afternoon.
In an announcement billed as bolstering the company’s transition to ecommerce sales, it named a number of new executive hires. Google and Amazon veteran Jenna Owens will become GameStop’s new chief operating officer effective March 29. Owens is coming to the company off of her most recent stint as director and general manager for distribution and multi-channel fulfillment at Amazon.
GameStop has also hired former Zulily VP of supply chain tech Ken Suzuki as its new VP of supply chain, and former Chewy Inc. VP of ecommerce Neda Pacifico its new senior VP over ecommerce.
GameStop also announced that it closed 693 retail storefronts in 2020 – a 12% reduction of its global footprint. GameStop has been shrinking its retail presence for some time, and the hundreds of store closures have been expected since CEO George Sherman first discussed the acceleration of closings in 2019.
GameStop plans to operate with fewer stores as it attempts to funnel physical retail customers to its website which saw a 191% increase in sales globally last year. And the retailer appears to be making progress toward that shift, noting that its online sales increased to 34% of net sales in the fourth quarter of 2020 compared to 12% at the same time in 2019.
Over the course of the pandemic in 2020, online purchases accounted for one-third of GameStop’s sales, according to a company filing.
In a statement Tuesday, Sherman didn’t address the Reddit-fueled stock rally directly but nodded at activist investor Ryan Cohen saying the company has “added important experience to our board by appointing several new directors with backgrounds in corporate finance, E-Commerce and technology and subsequently established a strategy-focused committee to accelerate our transformation.”
Cohen, the founder of Chewy Inc., energized investors when he was added to GameStop’s board of directors in early January. Cohen is leading a new committee on the board aimed at transforming the company to succeed in the digital era. The committee took credit for recent hires and the resignation of GameStop’s chief financial officer, Jim Bell.
