Video game retailer GameStop (NYSE:GME) fell short of the market’s revenue expectations in Q4 CY2024, with sales falling 28.5% year on year to $1.28 billion. Its non-GAAP profit of $0.30 per share was significantly above analysts’ consensus estimates.
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Revenue: $1.28 billion vs analyst estimates of $1.48 billion (28.5% year-on-year decline, 13.2% miss)
Adjusted EPS: $0.30 vs analyst estimates of $0.08 (significant beat)
Operating Margin: 6.2%, in line with the same quarter last year
Free Cash Flow was $158.8 million, up from -$18.7 million in the same quarter last year
Market Capitalization: $11.44 billion
Drawing gaming fans with demo units set up with the latest releases, GameStop (NYSE:GME) sells new and used video games, consoles, and accessories, as well as pop culture merchandise.
After a long day, some of us want to just watch TV, play video games, listen to music, or scroll through our phones; electronics and gaming retailers sell the technology that makes this possible, plus more. Shoppers can find everything from surround-sound speakers to gaming controllers to home appliances in their stores. Competitive prices and helpful store associates that can talk through topics like the latest technology in gaming and installation keep customers coming back. This is a category that has moved rapidly online over the last few decades, so these electronics and gaming retailers have needed to be nimble and aggressive with their e-commerce and omnichannel investments.
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $3.82 billion in revenue over the past 12 months, GameStop is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, GameStop struggled to generate demand over the last five years (we compare to 2019 to normalize for COVID-19 impacts). Its sales dropped by 10% annually, a poor baseline for our analysis.
This quarter, GameStop missed Wall Street’s estimates and reported a rather uninspiring 28.5% year-on-year revenue decline, generating $1.28 billion of revenue.
Looking ahead, sell-side analysts expect revenue to decline by 1.9% over the next 12 months. While this projection is better than its five-year trend, it’s hard to get excited about a company that is struggling with demand.
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