GameStop Corp. (GME, Financials) posted a surprising net profit in its fiscal third-quarter results, signaling progress in its turnaround efforts.
Reversing a loss of $3.1 million from the same time a year ago, the video game retailer stated net profits of $17.4 million, or 4 cents per share. The embattled game retailer reported adjusted profits of 6 cents per share surpassing forecast projections of a 3-cent loss.
But revenue for the quarter dropped 20% year-over-year to $860 million, short of Wall Street's projection of $888 million. The fall from $1.08 billion in the year before highlights difficulties maintaining sales increase. Still, GameStop shares jumped 8.2% in after-hours trading after the results release.
Selling 20 million shares during the quarter, the business also said that it raised around $400 million via a "at- the-market" stock sale. GameStop affirmed that there are no intentions for any stock sales during the current fiscal year.
Reflecting a 3.51% loss, GameStop's shares closed on the day of the news at $26.93. Rebounding 3.16%, the shares traded at $27.78 in pre-market trading.
The most recent data show how well cost-cutting techniques—including concentrating on higher-margin items and lowering running expenses—work. Still, the business is up against major challenges like decreased foot traffic in physical shops and competition from internet sites.
Investors' major concern still is GameStop's capacity to stay profitable despite negotiating decreasing revenues. The findings point to cautious optimism but underscore the necessity of reliable income sources to balance continuous market difficulties.
