GameStop’s CEO says the ailing retail chain is on the cusp of an unprecedented turnaround.
While investors who saw the company post back-to-back sales declines and its seventh consecutive quarter of losses Wednesday (Dec. 7) evening might disagree, CEO Matthew Furlong said the path from “repairing decayed foundations” to “near-term profitability” was almost complete.
“We’re attempting to accomplish something unprecedented in the retail sector,” Furlong told investors on the company’s Q3 earnings call. “We’re seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy into a retailer that meets customers’ needs through our stores, e-commerce properties and emerging sales channels,” he added, calling the path risky and time-consuming albeit one he said that was working.
Furlong’s comments come 18 months into his tenure atop the ailing retailer, and roughly nine months since Chewy Co-founder and activist investor Ryan Cohen’s entry as chairman and top shareholder.
While the meteoric gains and daily stock gyrations of the meme stock era are largely faded at this point, the hard work of actually reviving the business and brand has not. While Cohen was not mentioned in the results of call, Furlong revealed a pair of priorities that should please his billionaire boss.
“Looking ahead, we have two overarching priorities: achieving profitability in the near term; and driving pragmatic growth over the long term,” Furlong said, adding that a year of cost cuts, staff reductions and operational realignment were about to pay off.
“GameStop is stronger business today than at any time in the recent past,” he said.
After the Gold Rush
With total U.S. storefronts hovering just north of 3,000 locations, the legacy video game retailer intends to focus on opportunities in gaming as well as high growth potential categories like collectibles and pre-owned businesses, Furlong said, noting the company’s strong cash and low debt position would allow it to consider acquisitions amid a challenging economic backdrop.
While GameStop launched its non-fungible token (NFT) marketplace on the gaming-focused Ethereum layer-2 blockchain ImmutableX in November, the company’s prior partnership with collapsed crypto exchange FTX was not addressed, but its former passion for cryptocurrency was.
“The company has proactively minimized exposure to cryptocurrency risk throughout the year and does not currently hold a material balance of any token,” Furlong said.
And even though he thinks there’s still a long-term potential for digital assets in the gaming world, he ruled out any return to that category.
“We have not and will not risk meaningful stockholder capital in the space,” Furlong said.
As for the all-important holiday season, GameStop — like most other retailers — found itself with excess inventory in 2022 but said it has taken steps to fix its mix.
“We continue to maintain a strong cash position while sustaining strong in-stock levels for the busy holiday season,” he said.
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