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GameStop Q3 Earnings Beat Despite Sales Decline of 20% Y/Y
GMEGameStop(GME) ZACKS·2024-12-11 17:31

Core Insights - GameStop Corp. (GME) reported third-quarter fiscal 2024 results, with net sales missing estimates and declining year over year, while adjusted earnings per share exceeded expectations and improved from the previous year [1][2]. Financial Performance - Adjusted earnings per share were 6 cents, surpassing the Zacks Consensus Estimate of break-even earnings [2]. - Net sales totaled 860.3million,fallingshortoftheconsensusestimateof860.3 million, falling short of the consensus estimate of 900 million and decreasing by 20.2% from 1,078.3millioninthesamequarterlastyear[3].−Salesacrossallcategoriescontributedtothedeclineinconsolidatednetsales[3].SalesBreakdown−Hardwareandaccessoriessalesdropped281,078.3 million in the same quarter last year [3]. - Sales across all categories contributed to the decline in consolidated net sales [3]. Sales Breakdown - Hardware and accessories sales dropped 28% to 417.4 million from 579.4millionyearoveryear[4].−Softwaresaleswere579.4 million year over year [4]. - Software sales were 271.8 million, down 15.4% from 321.3millionintheprioryear[4].−Collectiblessalesdecreased3.7321.3 million in the prior year [4]. - Collectibles sales decreased 3.7% to 171.1 million from 177.6millionintheyear−agoquarter[4].−Geographicsalesdeclinesincluded24.5177.6 million in the year-ago quarter [4]. - Geographic sales declines included 24.5% in Canada, 22% in Europe, 20.4% in the United States, and 12.5% in Australia year over year [4]. Margin and Expense Analysis - Gross profit decreased 8.7% to 257.2 million from 281.8millionintheyear−agoquarter,butgrossmarginexpandedby380basispointsto29.9281.8 million in the year-ago quarter, but gross margin expanded by 380 basis points to 29.9% compared to 26.1% in the previous year [5]. - Adjusted selling, general and administrative (SG&A) expenses fell 4.4% to 281.8 million from 294.9 million year over year, with SG&A expenses as a percentage of net sales rising to 32.8%, up 550 basis points from 27.3% [6]. - The adjusted EBITDA loss was 11.2 million, a decline from an adjusted EBITDA of 5.1millioninthesamequarterlastyear[6].OperatingLoss−Theadjustedoperatinglosswas5.1 million in the same quarter last year [6]. Operating Loss - The adjusted operating loss was 24.6 million in the reported quarter, compared to an adjusted operating loss of 13.1millionintheprior−yearperiod[7].CashandDebtPosition−GameStopendedthefiscalthirdquarterwithcashandcashequivalentsof13.1 million in the prior-year period [7]. Cash and Debt Position - GameStop ended the fiscal third quarter with cash and cash equivalents of 4.58 billion, marketable securities of 32.8million,andnetlong−termdebtof32.8 million, and net long-term debt of 9.6 million [8]. - Stockholders' equity stood at 4.8billion,withmerchandiseinventorytotaling4.8 billion, with merchandise inventory totaling 830.2 million, down from 1,021.3millioninthesameperiodlastyear[8].CashFlowandEquityOffering−Netcashflowfromoperationswas1,021.3 million in the same period last year [8]. Cash Flow and Equity Offering - Net cash flow from operations was 24.6 million, up from 19.1millionintheprior−yearperiod,withfreecashflowtotaling19.1 million in the prior-year period, with free cash flow totaling 20 million [9]. - Capital expenditures amounted to 4.6million,andthecompanyraisedapproximately4.6 million, and the company raised approximately 400 million through the sale of 20 million shares in its equity offering program [9]. Stock Performance - GameStop's shares rose 3% in after-market trading, with a 41.3% increase over the past three months, outperforming the industry's 17.4% growth [10].