GameStop Turns A Profit For The First Time In Two Years After Major Layoffs In 2022
GameStop is back in black after implementing at least three rounds of staff layoffs in 2022.
GameStop has returned to profitability. The company announced earnings results this week, reporting that it posted a profit of $48.2 million for the fourth quarter of its fiscal year, marking the company's first quarterly profit in two years. This was a massive improvement compared to the $147.5 million loss during the same period last year.
GameStop posted these results after implementing a series of cost-cutting measures, including layoffs. In fact, GameStop enacted at least three rounds of significant layoffs in 2022. Not only that, but managers have reported being under intense pressure to deliver results, according to Polygon.
GameStop saw revenue of $2.226 billion during the fourth quarter, down slightly from $2.254 billion. For the full year, the picture wasn't as rosy. GameStop posted revenue of $5.927 billion for the full year, down from $6.011 billion during the previous fiscal year. For the full year, GameStop posted a loss $313.1 million, an improvement from the $381.3 million loss during the previous year.
But the quarterly profit is what the company is focusing on as an indication that its numerous strategies to turn things around are actually working.
GameStop CEO Matt Furlong said the company's aim is to create a path toward full-year profitability in the future. For the full year, GameStop had $1.39 billion in cash and cash equivalents on hand, compared to $1.27 billion last year.
During an earnings call, Furlong said GameStop will continue to look to "aggressively cut costs" in the future to make more money, including making adjustments in Europe specifically. Furlong acknowledged the layoffs and said that as he sees it, those remaining with the company have been enthusiastic about the new "fast-paced" and "intense operating environment" at the company.
Another way GameStop will look to make more money in 2023 is by getting better terms from suppliers and vendors, Furlong said, and by allocating enough new consoles to meet demand. GameStop will also prioritize its collectibles category (think Funko Pops), which is a business that GameStop sees a lot of growth potential in.
Investors are seemingly responding positively to the earnings report, as GameStop's stock price soared in after-hours trading and is expected to open today, March 22, at close to $26 per share (up from about $18 at close on March 21).
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