GameStop (NYSE:GME) stock is plunging lower by more than 15% today after the video game retailer reported first-quarter earnings and announced it had fired CEO Matt Furlong without cause. Meanwhile, Ryan Cohen was appointed as the Executive Chairman of the company, with duties such as “capital allocation and overseeing management.”
GameStop made other leadership changes as well. For example, Mark Robinson was appointed as the new principal executive officer with the title of General Manager. Meanwhile, former Chewy (NYSE:CHWY) executive Alan Attal was also named as the lead independent director of the board.
“We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders,” said GameStop in its Form 10-Q.
Making matters worse, GameStop declined to hold an earnings conference call.
GME Stock: Can Ryan Cohen Save GameStop?
During the first quarter, GameStop reported revenue of $1.237 billion while analysts were expecting $1.358 billion. That reflects a substantial miss of about 9% and a year-over-year (YOY) decline of about 10%. Diving into revenue, $725.8 million of sales came from hardware and accessories, $338.3 million came from software and the remaining $173 million came from collectibles.
Furthermore, GameStop reported a net loss of $50.5 million for Q1, or an adjusted EPS loss of 17 cents. Analysts were expecting an adjusted EPS loss of 12 cents. A year ago, net loss tallied in at $157.9 million, while adjusted EPS was a loss of 52 cents.
GameStop noted that its cost-cutting measures are expected to lead to “favorable impacts” in relation to selling, general, and administrative (SG&A) expenses during the upcoming quarters. During Q1, SG&A expenses were $345.7 million, accounting for 27.9% of net sales. A year ago, SG&A expenses were $452.2 million and accounted for 32.8% of net sales.
Shareholders are reacting negatively to the earnings report, and rightfully so. On the bright side, GameStop’s cash, cash equivalents and marketable securities balance increased to $1.31 billion, compared to $1.035 billion a year ago. Cash used in operating activities during the quarter was $102.7 million, down from $303.9 million in Q1 2022.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.