GameStop sees sales plummet in Q2, slight profit, and cash pile up to over $4B

GameStop Corp. (NYSE:GME) fell in post market trading after disclosing disappointing sales numbers for its second quarter.

Revenue fell 31.2% year-over-year for the quarter that ended on August 3 to $798.3 billion. Hardware and accessories sales accounted for 56.5% of total sales vs. 51.3% a year ago, while software sales fell to 26.0% of the mix from 34.1% last year. Collectibles revenue was up to 17.5% of the total vs. 14.6% a year ago.

The Texas-based company said selling, general and administrative expenses were 33.7% of sales, compared to 27.8% of sales a year ago. Cost of sales fell to 70.6% of total sales vs. 75.3% a year ago. GameStop (GME) recorded a net income loss of $17.5 million in Q2, vs. a net income loss of $53.3 million a year ago. EPS was $0.01 for the quarter, vs. -$0.09 consensus and -$0.03 a year ago.

On the balance sheet, GameStop (GME) ended the quarter with $4.2 billion in cash and merchandise inventory was reported at $560.0 million vs. $676.9 million a year ago. GameStop (GME) had long-term debt of $12.4 million at the end of the quarter

GameStop (GME) did not issue any comments from CEO Ryan Cohen and the retailer will not be holding an earnings conference call.

Wedbush Securities is one of just a handful of firms with coverage on GameStop (GME). The firm has an Underperform rating on the retailer due to its view that it continues to face a near “insurmountable barrier” to its planned return to growth. Analyst Michael Pachter pointed to the ongoing shift of game sales from physical to digital, a decline in game sales as microtransactions proliferate, the growth of subscription services, and an ongoing hardware sales decline as major headwinds.

Shares of GameStop (GME) fell 3.2% post market on Tuesday to $23.47 vs. the 52-week trading range of $9.95 to $64.83. Short interest on GME stands at 8.4% of the total float. The market cap on GameStop (GME) is $10.2 billion.