GameStop chairman and new CEO Ryan Cohen appears to be steering the Grapevine-based brick-and-mortar retailer closer toward profitability, despite gamers dialing back their spending in the third quarter of 2023.
GameStop reported a net loss of $3.1 million, or 1 cent per share for the period, compared to a net loss of $94.7 million, or 0.31 cents for the prior year’s third quarter, according to the company’s Q3 financial results released Wednesday.
Net sales also saw a slight drop, with GameStop reporting $1.078 billion in Q3 2023 compared to $1.186 billion in Q3 2022.
Part of the reason for GameStop’s lower video game and collectibles sales could be due to U.S. consumers cutting spending during the quarter as they grappled with higher interest rates, inflation, and the resumption of student loan payments.
Earlier this year, Jefferies economist Tom Simons published a report warning of the downside risk associated with the student loan moratorium ending. Simons anticipated that the resumption of student loans would create a major drag on personal income and a potential $18 billion month-over-month drop in consumer spending, as reported by The Dallas Express.
On the topic of money management, GameStop also announced Wednesday that Cohen would take over as the retailer’s chief executive officer, giving him more leverage to steer the company into sustainable and long-term profitability.
Selling, general, and administrative expenses – the day-to-day costs of running a business – were $296.5 million, or 27.5% of net sales for the period. This is a sharp drop compared to the $387.9 million, or 32.7% of net sales, in the prior year’s third quarter, indicating GameStop is reeling in expenses and trimming the bloat.
GameStop’s cash, cash equivalents, and marketable securities were $1.21 billion at the close of the quarter with long-term debt remaining limited to a low-interest, unsecured term loan associated with the French government’s response to COVID-19.
At this time, it is unclear if Cohen will be able to pull off a financial turnaround for the company, but if GameStop pulls off a strong Q4 – typically its most profitable quarter – the retailer could end up achieving full-year profitability.