GameStop, the video games retailer whose shares have been the subject of a day-trading frenzy this year, recorded its first quarterly increase in same-store sales in two years on Tuesday and installed a former Amazon executive in a senior role.
The twin developments gave heart to an army of supporters who say the company can seize an opportunity to shift to ecommerce — even as hedge funds and other investors argue the tenfold increase in the company’s stock this year has been detached from reality.
GameStop’s comparable sales grew 6.5 per cent year on year in the three months to the end of January, compared with a 24.6 per cent drop in the third quarter, boosted by a surge in online revenues during the holiday period.
Ecommerce sales were up 175 per cent, accounting for 34 per cent of net sales in the fourth quarter versus 12 per cent a year earlier.
The retailer appointed former Amazon and Google executive Jenna Owens as its new operating chief, part of a broader shake-up of its leadership team as it looks to stem a years-long decline in sales.
The company has already tapped Ryan Cohen, its largest shareholder and the co-founder of Chewy.com, to lead an expansion of its ecommerce business.
Optimism about the turnround effort among followers of the Reddit message board WallStreetBets helped spark the big rally in GameStop’s shares early this year, culminating in a short squeeze that cost hedge funds billions of dollars and became the subject of congressional hearings.
Yet the latest quarterly results showed a company still shrinking. Net sales fell to $2.12bn from $2.19bn in the year-ago quarter, hit by coronavirus-related store closures in Europe and a 12 per cent reduction in GameStop’s store base.
GameStop’s sales have fallen in recent years as it struggled to adapt as digital downloads and free-to-play online games took over the gaming world and shopping mall traffic slowed as consumers went online.
George Sherman, chief executive, said the company is “off to a strong start” this year, citing a 23 per cent rise in February same-store sales amid strong global demand for gaming hardware.
“We are excited by the opportunities that are in front of us as we begin prioritising long-term digital and ecommerce initiatives while continuing to execute on our core business during this emerging console cycle,” he said.
“Our emphasis in 2021 will be on improving our ecommerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue.”
GameStop shares hit a record high of $483 during the Reddit trading frenzy in January and, before the results were released on Tuesday, was up 865 per cent since the start of 2021. In after-hours trading they dipped 15 per cent.
Earlier in the day, GameStop said its chief customer officer, Frank Hamlin, will resign at the end of March, the second departure of a senior executive this month. The company previously announced that chief financial officer Jim Bell will step down.
GameStop said it continues to “actively pursue” senior talent with ecommerce, retail and technology experience to help transform the business.