GameStop has shared its fourth quarter and fiscal year 2023 results, and with it comes the news that the retailer, once a prime spot for picking up video game hardware and physical games, will be cutting additional jobs to reduce operating costs. Shares of the company are reported to have fallen by 16% following the release of its latest numbers, which include a notable decline in net sales for the fourth quarter.
Thoughts from Michael Pachter, Wedbush Securities analyst:
- “An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately.”
- “Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic.”
- “I suspect that they will keep trimming costs to generate breakeven or better, but it is inevitable that their sales will decline to an unsustainable level.”
Fourth quarter highlights:
- Net sales were $1.794 billion for the fourth quarter, compared to $2.226 billion in the prior year’s fourth quarter.
- Selling, general and administrative (“SG&A”) expenses were $359.2 million, or 20.0% of net sales, for the fourth quarter, compared to $453.4 million, or 20.4% of net sales, in the prior year’s fourth quarter.
- Net income was $63.1 million for the fourth quarter, compared to net income of $48.2 million for the prior year’s fourth quarter.
- Cash, cash equivalents and marketable securities were $1.199 billion at the close of the quarter.
- Long-term debt remains limited to a low-interest, unsecured term loan associated with the French government’s response to COVID-19.
Full-year highlights:
- Net sales were $5.273 billion for fiscal year 2023, compared to $5.927 billion for fiscal year 2022.
- SG&A expenses were $1.324 billion, or 25.1% of net sales, for fiscal year 2023, compared to $1.681 billion, or 28.4% of net sales, for fiscal year 2022.
- Net income was $6.7 million for fiscal year 2023, compared to a net loss of $313.1 million for fiscal year 2022.
- Adjusted EBITDA of $64.7 million for fiscal year 2023, compared to adjusted EBITDA of ($192.7) million for fiscal year 2022.
Reuters noted:
As of Feb. 3, the company had about 8,000 full-time salaried and hourly associates and between 13,000 and 18,000 part-time, hourly associates worldwide. That compares to 11,000 full-time salaried and hourly employees and between 14,000 and 27,000 part-time hourly employees in 2023.