fiscal third quarter sales sank 30% from the year prior. The stock was falling in after-market trading.
The videogame retailer (ticker: GME) reported a net loss of $18.8 million, or 29 cents a share. That came in ahead of consensus estimates that called for a loss of 85 cents a share, according to FactSet.
Sales of $1 billion came up short of estimates calling for $1.1 billion. Comparable sales fell 24.6% year over year. Such declines were largely expected, given the quarter ended in October—a month before
(ticker: SNE) and
(MSFT) launched their new gaming consoles. But the drop in comparable sales was still larger than estimates that called for such sales to fall 20.5%.
The company also said it is planning a shelf registration and prospectus supplement with the Securities and Exchange Commission that would allow it to sell stock through at-the-market offerings. That would effectively be the opposite of the buybacks called for by some investors, as such sales could dilute existing shares.
“We believe the shelf registration and associated at-the-market program, if we chose to use it, provide us further options to enhance our liquidity alternatives to support an efficient and successful execution of our transformational strategies,” Chief Financial Officer Jim Bell said in the earnings release.
As of Oct. 31, the company had $602.6 million in cash and restricted cash, nearly double what it had a year ago. It had $269.5 million of short-term debt and $216 million of long-term debt on its balance sheet. On Dec. 11, the company plans a voluntary early redemption of $125 million in principal amount of its 6.75% senior notes due in 2021.
The company offered some hope as investors look ahead to the launch of a new generation of gaming consoles. November same-store sales were up 16.5% year over year—though presumably November’s totals included sales from the new PlayStation 5 Digital Edition and Xbox Series S. Those consoles don’t have disc drives, which would effectively cut out GameStop’s business of buying and selling used games.
CEO George Sherman said in the earnings release that the company expects year-over-year sales growth and profitability during the fiscal fourth quarter.
“Overall, we remain confident in our strategy and look forward to executing in 2021 on the many exciting opportunities to leverage our brand, extensive loyalty member base, and increased digital capabilities to expand our addressable market and product offerings, providing growth in all things games and entertainment,” Sherman said.
GameStop stock was down 12.6% in after-market trading.
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