Justin Sullivan | News Getty Images | Getty Images GameStop said Wednesday that quarterly sales fell and losses widened as it burned through cash and inventory swelled. The company also revealed a new partnership with crypto exchange FTX. The company’s shares rose about 10% in after-hours trading. In the second fiscal quarter ended July 30, the video game retailer’s total sales fell to $1.14 billion from $1.18 billion in the year-ago period. Its losses widened to $108.7 million, or 36 cents a share, compared with a loss of $61.6 million, or 21 cents, a year earlier. GameStop’s results cannot be compared to estimates because so few analysts cover the company. The stock jumped to $734.8 million at the end of the quarter. That’s up from $596.4 million at the close of the previous year’s second quarter. The company said in a statement that it deliberately stockpiled merchandise to keep up with customer demand and address supply chain challenges. The retailer has spent heavily on new initiatives, including NFTs. It had $908.9 million in cash and cash equivalents at the end of the quarter – just over half of what it had at the end of the year-ago period. The company did not provide an outlook. It has not provided guidance since the beginning of the pandemic. However, GameStop has struggled to drive profits, leading it to cut costs and shake up leadership. Last month, the company fired its chief financial officer, Mike Recupero, and laid off employees across the board. Chief accounting officer Diana Jajeh stepped in as the company’s new CFO. The company’s expenses fell 14% from the first quarter of the year, reflecting those layoffs. GameStop has been looking for new ways to make money, including non-exchangeable coupons. It launched an NFT market in July, which is open to the public for beta testing. It allows users to connect their own digital asset wallets, including the recently launched GameStop wallet, so they can buy, sell and trade NFTs for virtual goods. As overall sales declined, the retailer pointed to the growth of some newer businesses. Sales attributable to collectibles rose from $177.2 million in the previous year’s second quarter to $223.2 million most recently. NFTs are traded on FTX, the retailer’s new partner. “In addition to partnering with FTX on new e-commerce and online marketing initiatives, GameStop will begin carrying FTX gift cards in select stores,” GameStop said in a statement. FTX was founded by billionaire ex-Wall Street trader Sam Bankman-Fried, 30. It has become a lender of last resort for crypto companies that have struggled as assets have plummeted since late last year. The FTX deal seems to play a role in GameStop’s status as a meme stock. The company’s shares experienced sharp fluctuations in value. Over the past year, shares have moved from $19.39 to $63.92. The company’s stock is down about 36% so far this year, bringing the company’s value to $7.31 billion. Read GameStop’s earnings release here. This is a developing story. Check back for updates.
