What happened

Shares of Gamestop (GME 0.10%) were up 6.9% as of 12:18 p.m. ET on Thursday after the company reported earnings results on Wednesday. For the fiscal first quarter ending April 30, the video game retailer reported net sales of $1.38 billion, exceeding the consensus analyst estimate that called for $1.34 billion. However, the company's adjusted net loss fell short of analyst estimates.

Investors were obviously more impressed with the sales beat. The stock's post-earnings bounce recovered some of the losses shareholders have experienced year to date. The shares are currently down 11.7% since the beginning of the year, slightly outperforming the S&P 500 loss of 13.4%.

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So what

The company credited sales from new and expanded brand relationships for the growth in sales last quarter. Another positive element putting the company in position to deliver strong sales performance is inventory, which was over 50% higher than in the year-ago quarter. This was particularly encouraging given the tight supply chains hurting many retailers right now.

Gamestop also ended the quarter in fine shape financially, with more than $1 billion in cash on the balance sheet and very little long-term debt. 

The higher inventory and growth in sales coming from new brand relationships suggest that management's strategy to shore up the fading brick-and-mortar retail business is taking hold.

A person using a smartphone while sitting at the kitchen table.

Image source: Getty Images.

Now what

Gamestop's transformation into a "customer-obsessed technology company" focused on e-commerce, gaming and entertainment, and new growth opportunities, such as cryptocurrency and Web3 is moving forward. 

During the earnings call, CEO Matthew Furlong said, "In the quarters and years ahead, we're going to continue embracing change, putting the customer first and focusing on long-term stockholder value."  

Just a few weeks ago, the company launched its digital asset wallet to allow gamers to store, send, receive, and use cryptocurrencies and non-fungible tokens (NFTs) with decentralized apps. The Gamestop Wallet will allow customers to make payments on the company's new NFT marketplace, which is scheduled to launch in the second quarter.