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GameStop (GME) Q1 Earnings Miss Estimates, Sales Decline Y/Y
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GameStop Corp. (GME - Free Report) posted first-quarter fiscal 2024 results, delivering lower-than-expected earnings per share and revenues. While the top line declined year over year, the bottom line compared favorably with the year-ago quarter’s reported figure. Higher inflationary pressures on consumer spending in the gaming industry have been resulting in lower demand and, in turn, weighing on the company’s results.
Shares of this Zacks Rank #4 (Sell) company have gained 16.1% in the past year compared with the industry’s 14.6% growth.
GameStop posted an adjusted loss per share of 12 cents in first-quarter fiscal 2024 compared with the Zacks Consensus Estimate of an adjusted loss of 10 cents. The company reported an adjusted loss of 14 cents in the prior-year quarter.
GME reported net sales of $881.8 million, which missed the consensus estimate of $900 million. Also, the metric decreased 28.7% from $1,237.1 million reported in the year-ago quarter. Lower sales across all the categories contributed to soft sales.
By sales mix, hardware and accessories sales fell 30.4% to $505.3 million from $725.8 million reported in the year-ago quarter. Software sales were $239.7 million, down 29.1% from $338.3 million in the year-ago quarter. Sales in the collectibles unit declined 20.9% to $136.8 million compared with $173 million reported in the year-ago quarter.
Image Source: Zacks Investment Research
Margins
Gross profit decreased 14.9% to $244.5 million from $287.3 million in the year-ago quarter. We note that gross margin expanded 450 basis points (bps) year over year to 27.7% in the quarter under review.
Adjusted selling, general and administrative (SG&A) expenses declined 11.5% to $299.5 million from $338.5 million in the year-ago quarter. As a percentage of net sales, adjusted SG&A expenses were 34%, up 660 bps from 27.4% in the year-ago period.
The company’s adjusted operating loss was $55 million in the reported quarter. It had reported an adjusted operating loss of $51.2 million in the prior-year period.
Other Financial Aspects
GameStop ended the fiscal first quarter with cash and cash equivalents of $999.9 million, net long-term debt of $14.9 million and stockholders’ equity of $1.31 billion. Merchandise inventory was $675.8 million at the end of the reported quarter compared with $759.5 million at the close of the same quarter last year.
During the 13 weeks ended May 4, 2024, the company used cash flow from operations of $109.8 million against an outflow of $102.7 million during the prior-year period. The free cash flow during the same period was a negative $114.7 million. Capital expenditure in the 13 weeks amounted to $4.9 million.
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 17.5% and 0.1%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank of 1. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s current fiscal-year earnings and sales indicates growth of 47.5% and 10.5%, respectively, from the fiscal 2023 reported figures. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It sports a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings indicates growth of 13.7% from the year-ago period’s reported figures. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
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GameStop (GME) Q1 Earnings Miss Estimates, Sales Decline Y/Y
GameStop Corp. (GME - Free Report) posted first-quarter fiscal 2024 results, delivering lower-than-expected earnings per share and revenues. While the top line declined year over year, the bottom line compared favorably with the year-ago quarter’s reported figure. Higher inflationary pressures on consumer spending in the gaming industry have been resulting in lower demand and, in turn, weighing on the company’s results.
Shares of this Zacks Rank #4 (Sell) company have gained 16.1% in the past year compared with the industry’s 14.6% growth.
GameStop Corp. Price, Consensus and EPS Surprise
GameStop Corp. price-consensus-eps-surprise-chart | GameStop Corp. Quote
Q1 in Detail
GameStop posted an adjusted loss per share of 12 cents in first-quarter fiscal 2024 compared with the Zacks Consensus Estimate of an adjusted loss of 10 cents. The company reported an adjusted loss of 14 cents in the prior-year quarter.
GME reported net sales of $881.8 million, which missed the consensus estimate of $900 million. Also, the metric decreased 28.7% from $1,237.1 million reported in the year-ago quarter. Lower sales across all the categories contributed to soft sales.
By sales mix, hardware and accessories sales fell 30.4% to $505.3 million from $725.8 million reported in the year-ago quarter. Software sales were $239.7 million, down 29.1% from $338.3 million in the year-ago quarter. Sales in the collectibles unit declined 20.9% to $136.8 million compared with $173 million reported in the year-ago quarter.
Image Source: Zacks Investment Research
Margins
Gross profit decreased 14.9% to $244.5 million from $287.3 million in the year-ago quarter. We note that gross margin expanded 450 basis points (bps) year over year to 27.7% in the quarter under review.
Adjusted selling, general and administrative (SG&A) expenses declined 11.5% to $299.5 million from $338.5 million in the year-ago quarter. As a percentage of net sales, adjusted SG&A expenses were 34%, up 660 bps from 27.4% in the year-ago period.
The company’s adjusted operating loss was $55 million in the reported quarter. It had reported an adjusted operating loss of $51.2 million in the prior-year period.
Other Financial Aspects
GameStop ended the fiscal first quarter with cash and cash equivalents of $999.9 million, net long-term debt of $14.9 million and stockholders’ equity of $1.31 billion. Merchandise inventory was $675.8 million at the end of the reported quarter compared with $759.5 million at the close of the same quarter last year.
During the 13 weeks ended May 4, 2024, the company used cash flow from operations of $109.8 million against an outflow of $102.7 million during the prior-year period. The free cash flow during the same period was a negative $114.7 million. Capital expenditure in the 13 weeks amounted to $4.9 million.
Key Picks
A few better-ranked stocks are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Canada Goose (GOOS - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 17.5% and 0.1%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank of 1. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s current fiscal-year earnings and sales indicates growth of 47.5% and 10.5%, respectively, from the fiscal 2023 reported figures. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It sports a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings indicates growth of 13.7% from the year-ago period’s reported figures. GOOS has a trailing four-quarter average earnings surprise of 70.9%.