GameStop Struggles to Modernize as Sales and Profits Continue to Decline

GameStop reported disappointing Q4 results with revenue down 19.7% year-over-year and EPS missing estimates by $0.07. The company continues to face challenges to its retail business model.

Gross margin rose 100bps vs Q4 last year to 23.4% due to cost optimizations and lower freight expenses. SG&A expenses also dropped 21%.

Analyst Colin Sebastian has limited confidence in GameStop's ability to restore growth and drive further operating efficiency going forward.

GameStop provided limited information on plans to modernize consumer experience and restore growth. Bulls point to new hardware and GTA 6 release as potential catalysts.

At current levels, Sebastian cannot recommend buying GameStop stock due to ongoing business model concerns and limited information from management on growth plans.