GameStop Corp. GME posted third-quarter fiscal 2024 results, wherein the top line missed the Zacks Consensus Estimate and declined year over year. On the contrary, the bottom line beat the consensus mark and improved from the year-ago period.

GameStop’s Quarterly Performance: Key Insights

GME posted adjusted earnings per share of 6 cents, beating the Zacks Consensus Estimate of break-even earnings.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

GameStop reported net sales of $860.3 million, which missed the consensus estimate of $900 million. Also, the metric decreased 20.2% from $1,078.3 million in the year-ago quarter. The decrease in consolidated net sales was caused by lower sales across all categories.

By sales mix, hardware and accessories sales fell 28% to $417.4 million from $579.4 million in the year-ago quarter. Software sales were $271.8 million, down 15.4% from $321.3 million in the year-ago quarter. Sales in the collectibles unit declined 3.7% to $171.1 million from $177.6 million in the year-ago quarter.

By geographic location, net sales declined 24.5% in Canada, 22% in Europe, 20.4% in the United States and 12.5% in Australia year over year.

Insight Into GME’s Margins & Expenses Performance

Gross profit decreased 8.7% to $257.2 million from $281.8 million in the year-ago quarter. The gross margin expanded 380 basis points (bps) to 29.9% compared with 26.1% in the third quarter of fiscal 2023. This margin expansion was driven by a strategic shift toward higher-margin product categories, including collectibles and preowned hardware and accessories, along with enhanced inventory management.

Adjusted selling, general and administrative (SG&A) expenses declined 4.4% to $281.8 million from $294.9 million in the year-ago quarter. As a percentage of net sales, adjusted SG&A expenses were 32.8%, up 550 bps from 27.3% in the year-ago period. 

GameStop reported an adjusted EBITDA loss of $11.2 million, down from an adjusted EBITDA of $5.1 million in the same quarter last year.

The company’s adjusted operating loss was $24.6 million in the reported quarter compared with an adjusted operating loss of $13.1 million in the prior-year period.

GME’s Financial Snapshot: Cash, Debt & Equity Overview

GameStop ended the fiscal third quarter with cash and cash equivalents of $4.58 billion, marketable securities of $32.8 million, net long-term debt of $9.6 million and stockholders’ equity of $4.8 billion. Merchandise inventory totaled $830.2 million at the end of the fiscal quarter, down from $1,021.3 million in the same period last year.

During the 13 weeks ended Nov. 2, 2024, the net cash flow provided by operations was $24.6 million compared with $19.1 million in the prior-year period. Free cash flow for the period totaled $20 million, while capital expenditures amounted to $4.6 million.

GME also concluded its previously announced "at-the-market" equity offering program, raising approximately $400 million in gross proceeds through the sale of 20 million shares.

Shares of this Zacks Rank #3 (Hold) company rose 3% in the after-market trading session yesterday. In the past three months, it has gained 41.3%, outperforming the industry’s 17.4% growth.

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Stocks to Consider

Flutter Entertainment plc FLUT operates as a sports betting and gaming company, which offers sports betting, iGaming, daily fantasy sports, online racing wagering and TV broadcasting products. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Flutter Entertainment’s current fiscal-year sales and earnings indicates growth of 20.8% and 66.7%, respectively, from the prior-year reported levels. FLUT delivered a trailing four-quarter average earnings surprise of 116.5%.

Rush Street Interactive, Inc. RSI operates as an online casino and sports betting company, which provides real-money online casino, online and retail sports betting and social gaming services. It currently sports a Zacks Rank #1. RSI delivered a trailing four-quarter average earnings surprise of 225%. 

The Zacks Consensus Estimate for Rush Street Interactive’s current fiscal-year sales and EPS indicates growth of 33% and 235.7%, respectively, from the prior-year levels.

Accel Entertainment, Inc. ACEL operates as a distributed gaming operator, which involves in the installation, maintenance and operation of gaming terminals. It currently carries a Zacks Rank #2 (Buy). ACEL delivered a trailing four-quarter average earnings surprise of 26.1%.

The Zacks Consensus Estimate for Accel Entertainment’s current fiscal-year sales indicates growth of 4.2% from the prior-year reported levels.

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