On June 7, 2024, GameStop Corp (GME, Financial) released its 8-K filing for the first quarter ended May 4, 2024. GameStop Corp is a U.S. multichannel video game, consumer electronics, and services retailer operating across Europe, Canada, Australia, and the United States. The company sells new and second-hand video game hardware, software, and accessories through its GameStop, EB Games, and Micromania stores, as well as international e-commerce sites.
Performance Overview
GameStop Corp (GME, Financial) reported net sales of $881.8 million for Q1 2024, a significant decline from $1,237.1 million in the same period last year. This figure fell short of the analyst estimate of $995.31 million. The company posted a net loss of $32.3 million, or $0.11 per share, compared to a net loss of $50.5 million, or $0.17 per share, in Q1 2023. The reported loss per share was slightly worse than the analyst estimate of -$0.10.
Financial Achievements and Challenges
Despite the revenue decline, GameStop Corp (GME, Financial) managed to narrow its losses, reflecting improved cost management. The gross profit margin increased to 27.7% from 23.2% in the previous year, indicating better control over cost of sales. However, selling, general, and administrative (SG&A) expenses remained high at $295.1 million, though down from $345.7 million in Q1 2023.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net Sales | $881.8 million | $1,237.1 million |
| Gross Profit | $244.5 million | $287.3 million |
| Net Loss | $(32.3) million | $(50.5) million |
| Loss Per Share | $(0.11) | $(0.17) |
Income Statement Highlights
GameStop Corp (GME, Financial) reported a gross profit of $244.5 million, down from $287.3 million in Q1 2023. The operating loss was $50.6 million, an improvement from the $58.4 million loss in the previous year. Interest income increased to $14.9 million from $9.7 million, contributing positively to the bottom line.
Balance Sheet and Cash Flow
As of May 4, 2024, GameStop Corp (GME, Financial) had total assets of $2,587.1 million, down from $3,070.2 million a year earlier. Cash and cash equivalents stood at $999.9 million, a decrease from $1,057.0 million. The company’s total liabilities were $1,279.8 million, down from $1,798.6 million, reflecting a reduction in accounts payable and accrued liabilities.
Cash Flow Statement
Net cash used in operating activities was $109.8 million, compared to $102.7 million in Q1 2023. The company generated $189.8 million from investing activities, primarily from the sale of marketable securities. Financing activities used $2.7 million, consistent with the previous year.
Sales Mix
| Category | Q1 2024 | Q1 2023 |
|---|---|---|
| Hardware and Accessories | $505.3 million (57.3%) | $725.8 million (58.7%) |
| Software | $239.7 million (27.2%) | $338.3 million (27.3%) |
| Collectibles | $136.8 million (15.5%) | $173.0 million (14.0%) |
Analysis
GameStop Corp (GME, Financial) continues to face challenges in a rapidly evolving retail environment. The decline in net sales highlights the ongoing pressure from digital transformation and changing consumer preferences. However, the company’s efforts to manage costs and improve gross margins are positive signs. The reduction in net loss and improved cash flow from investing activities indicate a strategic focus on financial stability.
For value investors, the key takeaway is GameStop Corp (GME, Financial)’s ability to navigate its transformation while managing costs effectively. The company’s substantial cash reserves provide a buffer against ongoing market challenges, but the decline in revenue underscores the need for continued adaptation and innovation in its business model.
For more detailed insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from GameStop Corp for further details.
