GameStop quarterly revenue beats estimates for video game demand growth

People walk by GameStop in Manhattan, New York, US, December 7, 2021. REUTERS/Andrew Kelly

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June 1 (Reuters) – GameStop Corp (GME.N) First-quarter earnings reported beating market expectations on Wednesday, as the video game retailer moves toward a more online-focused model amid increased competition from major retailers such as Walmart Inc. (WMT.N) and Amazon.com Inc (AMZN.O).

Store closures during the COVID-19 pandemic have affected GameStop’s physical retail business, for which it is primarily known. The company is boosting its online sales capabilities as shopping trends toward e-commerce accelerate during the pandemic.

In May, GamStop launched its own digital asset wallet for storing, sending, receiving and using cryptocurrencies and non-fungible tokens (NFTs). The wallet can also be used for transactions on GameStop’s NFT Marketplace, which is expected to go live later this year.

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Wedbush analyst Michael Pachter called Gamestop’s NFT market announcement “nonsense,” saying that “there will be no NFTs to sell, there will be no customers, and the wallets they offer will be empty.”

Pachter added that there had been no Q&A session in earning calls for several consecutive quarters and no opportunity to get clarification on their NFT market product and strategy.

GameStop said its inventory in the quarter ended April 30 rose to $917.6 million from $570.9 million a year earlier, amid increased customer demand and potential supply chain disruptions.

Software and collectibles sales contributed more than 50% of total quarterly revenue for the first time since the third quarter of 2020.

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GameStop shares are up 687% last year because it has been at the center of a battle between retail investors coordinating on online forums and Wall Street hedge funds that have taken short positions in the company, in what’s called “short squeeze.”

The company’s net sales came in at $1.38 billion in the first quarter, above the average analyst estimate of $1.32 billion, according to Refinitiv data.

The company’s net loss widened to $157.9 million, or $2.08 per share, for the first quarter, from $66.8 million, or $1.01 per share, a year earlier.

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Additional reporting by Akash Sriram in Bengaluru; Editing by Krishna Chandra Ellory

Our criteria: Thomson Reuters Trust Principles.

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