GameStop’s shares are a market phenomenon; their wild gyrations are seemingly detached from reality. For believers, though, the struggling video-game retailer is a turnaround play, led by e-commerce success story Ryan Cohen. How, then, to interpret GameStop Corp.’s latest quarterly results?
The company late Tuesday released holiday-quarter earnings, revealing sales that were slightly below expectations at $2.12 billion, compared to the $2.24 billion estimate. Citing uncertainty from the pandemic, GameStop also said it would not give guidance for the full year — though it added February was off to a “strong start,” with comparable sales up 23% from a year earlier. The market’s reaction was an after-market sell-off.
The truth is, GameStop’s financial results are backward-looking and don’t matter all that much, as I wrote last week. GameStop’s value is now dependent on Cohen’s ability to execute on his plan to transform the retailer into an e-commerce leader for the gaming and consumer-electronics categories, similar to what he did with online pet-supply retailer Chewy Inc., which he co-founded and led as chief executive officer. The good news for the faithful is that Cohen’s turnaround appears to be on track — and a lot of it has to do with the talent he’s been able to attract.
All of GameStop’s latest hires have the accomplished biographies needed to implement his vision. On Tuesday, the company announced three new additions: Jenna Owens, a key executive overseeing distribution and fulfillment at Amazon.com Inc., as its chief operating officer; Neda Pacifico, a former Chewy executive, as senior vice president of e-commerce; and Ken Suzuki, previously Zulily’s vice president of supply chain systems. These latest recruits came after three other key hires last month, who had similar impressive e-commerce expertise.
There are other positive signs. Cohen seems to be intimately involved in figuring out how to improve GameStop’s operations. On Tuesday, Reuters reported Cohen has been contacting customers, asking for feedback and also advocating for a website overhaul. Further, GameStop is increasing product selection in attractive new categories. Last month, I (BA)ODT1UM13″ itemprop=”suid”/> recommended that GameStop should compete more aggressively in the PC gaming hardware space — specifically in selling the latest high-price PC graphics cards from Nvidia Corp. It looks like they are doing just that. Earlier on Tuesday, some gamers on social media noticed GameStop had product listings for many of Nvidia’s latest cards.
Gamestop’s stock may continue to have its ups and downs, but the story is just getting started for the company’s business transformation. It’s going to require patience and time, but Cohen seems to be finding the right people and getting more involved in the business. That bodes well.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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Beth Williams at [email protected]