Dive Brief:

• In its first earnings report since an activist shakeup and famously wild stock swings this year, GameStop posted better-than-expected comparable sales and worse-than-expected operating income for its fourth quarter.
• The retailer also gave an update on its go-forward strategy, which called for technology investments, enhanced consumer experience, expanded product offerings, modernized fulfillment operations, creating a domestic customer care operation, and leaning on its loyalty program and Game Informer publication. 
• GameStop also announced the appointment of Jenna Owens, a veteran of Amazon and Google, as the retailer's new chief operating officer — a role GameStop previously eliminated in 2019. GameStop hired executives to lead its supply chain systems and e-commerce units as well. 

Dive Insight:

GameStop's Q4 report came with abnormally high interest this year after investors bid its stock up to dizzying heights only to watch the price collapse and rise again. Perhaps more important, in the long run, was the chance to unveil a new strategy at the company following an activist shakeup of the gaming retailer's board. 

Last fall, Ryan Cohen, founder and former CEO of the digital pet retail specialist Chewy, took a stake in GameStop and demanded that the company get in front of gaming's shift to the digital realm. More than that, Cohen called for GameStop to transform itself from a brick-and-mortar retailer, with its 4,000-plus stores, to a "technology company."

Earlier this year, Cohen and allies joined GameStop's board, and Cohen now leads a committee tasked with transforming the retailer. The company's Q4 release presented an opportunity to shed a little light on what exactly the plans are for GameStop and how it might change into a different sort of company. 

What GameStop offered up was, in the words of one analyst group: "normal." In other words, the things that GameStop outlined — investments in tech, customer experience, fulfillment and so on — are things pretty much every healthy specialty retailer is doing right now. 

"The highly anticipated 4Q20 earnings report from GameStop was a bit anti-climactic," Telsey Advisory Group analysts led by Joseph Feldman said in an emailed research note. 

Noting GameStop's outlined initiatives, the analysts added: "While there is nothing wrong with the strategy, it seems rather 'normal;' it is not the transformational commentary most were expecting to hear." 

As it shifts priorities, however, the company has begun filling out its management team with executives who have tech and e-commerce backgrounds.

Along with the appointment of Owens, the company tapped Neda Pacifico, former e-commerce vice president at Chewy, as GameStop's new senior vice president of e-commerce; and Ken Suzuki, previously vice president of supply chain technology at the e-tailer Zulily, as GameStop's new vice president of supply chain systems. Those changes follow the departure of Chief Financial Officer Jim Bell. 

Jefferies analysts led by Stephanie Wissink said in a note that the new appointments at GameStop signal "the degree of transformation underway."

As for Q4, comparable sales were up 6.5%, which Feldman's team said was better than expectations, while operating profit of $18.8 million was "much worse than expected," according to the analysts. E-commerce sales ballooned by 175% during the quarter and represented more than a third of net sales. 

The company also made financial and operational headway during the year, slashing debt and administrative costs and closing nearly 700 stores. GameStop ended the fiscal year with $635 million in cash, which it said in a release lays "the foundation for transformation."

Wissink's team sees potential for GameStop in the shift to e-commerce as well as the potential to profit from marketplaces, advertising platforms and "shoppable content streams," among other possibilities. "As a result, we expect store closures to persist and sales to transfer to dot com," the analysts said. "Total revs may come down, but value per dollar of sales should increase if non-retail streams are realized."