GameStop Might Actually Survive Until the New Consoles Come Along
Nobody expected video game retailer GameStop (NYSE: GME) to report good results in the first quarter. Caught amid the low-sales tail end of a console cycle, the slow death of brick-and-mortar retail stores, and the COVID-19 pandemic, sales and earnings were always going to fall. But the fiscal discipline GameStop mustered in order to make it through the coronavirus shutdowns might actually carry the company through to the next-generation console launches for the holidays.
GameStop's first-quarter sales fell 34% year-over-year to $1.02 billion. Hardware revenue dropped 21% lower, buoyed by strong demand for the Nintendo (OTC: NTDOY) Switch console, while sales of software and collectibles decreased by more than 40% each. Adjusted earnings swung from a profit of $0.07 per diluted share to a net loss of $1.61 per share. This was worse than expected, falling short of Wall Street's estimates across the board.
But all was not lost. GameStop burned just $55.9 million of free cash in this quarter, far better than the year-ago period's $683 million of negative free cash flow.
Source Fool.com
