GameStop’s (GME) share price is up 45% in premarket trading after the video game retailer posted a surprise quarterly profit.
The latest profit is the first in two years for the Texas-based company and is the result of strong holiday sales and improved inventory levels.
For the fiscal quarter ended January 28 of this year, GameStop’s net sales fell to $2.23 billion U.S. from $2.25 billion U.S. a year earlier.
The company posted a profit of $48.2 million U.S., or $0.16 U.S. a share, compared to a loss of $147.5 million U.S., or $0.49 U.S. per share a year ago.
As is common, GameStop did not provide any forward guidance. The company’s results cannot be compared with Wall Street estimates because very few analysts cover the company.
GameStop continues to cut costs to help achieve profitability. The company said its expenses came in at $453.4 million U.S. for the most recent quarter, or 20.4% of sales, compared to $538.9 million U.S., or 23.9% of sales, a year earlier.
The retailer also continues to reduce its number of physical store locations and increase its online business as the video game industry moves to digital downloads.
GameStop said it has $1.39 billion U.S. of cash on hand at the end of the quarter.
Prior to today, GameStop’s stock had fallen 43% in the last 12 months to trade at $17.65 U.S. per share.
