GameStop Corp.’s stock Soared 48% in Tuesday’s extended session after the specialty retailer reported surprise quarterly earnings and sales that beat Wall Street expectations.
The retailer is “aggressively focused on improving year-over-year profitability while pursuing pragmatic long-term growth,” Chief Executive Matt Furlong said on the company’s post-earnings conference call.
GameStop GME earned $48.2 million, or 16 cents a share, in the fourth quarter, compared to a loss of $147.5 million, or 49 cents a share, in the year-ago quarter.
Revenue declined slightly to $2.23 billion in the fourth quarter of last year, compared to $2.25 billion a year ago.
Analysts polled by FactSet expected the video game retailer to report an adjusted loss of 13 cents a share on sales of $2.18 billion.
GameStop announced that it reduced its inventory to $682.9 million at the end of the quarter, compared to $915 million at the end of the fourth quarter of 2022.
This reflected its “continued focus on maintaining a healthy inventory position,” the company said.
GameStop said it has completed most of its upgrades in infrastructure, systems, shipping capabilities, and online and mobile platforms.
Speaking to analysts on the phone following the results, Furlong said the company is taking steps this fiscal year to improve efficiencies and meet profitability targets.
These include further cost cutting, including in Europe, using GameStop’s “strengthened financial position” to further improve conditions from suppliers and allocating consoles in full to meet demand, he said.
Building a “stronger presence” in high-margin categories like collectibles and toys, where the company also sees “bodies of growth,” is also on the table, Furlong said.
“GameStop is a much healthier business today than it was in early 2021,” the CEO said.
GameStop stock ended the regular day up 4.6% and has gained about 12% in the four days since it closed at a two-year low.
GameStop has reported bigger-than-expected losses in three of the last four quarters, but the stock has gained an average of 8.2% the day after each of the last four reports, according to FactSet data.
The once-meme stock is down about 13% over the past three months, while the S&P 500 index SPX is up 2.6%.