GameStop shares surge as videogame retailer posts surprise profit

(Reuters) -GameStop Corp posted a surprise profit for the fourth quarter and surpassed revenue expectations as the videogame retailer trimmed costs and reduced headcount, sending its shares more than 32% higher in extended trading.

The company has been shoring up its online sales capabilities in a bid to transform into a digital behemoth from its current mainstay of brick-and-mortar stores.

GameStop (NYSE:) has also been targeting profitability by reining in expenses and focusing on higher-margin collectibles and pre-owned product categories. Its selling, general and administrative costs fell by about 16% in the quarter.

The retailer posted an adjusted profit of 16 cents per share, compared with Wall Street expectations for a loss of 13 cents.

The stock, which is popular among retail investors, lost about half its value last year and has declined 4% so far this year.

Net profit for the quarter ended Jan. 31, GameStop’s first in eight quarters, was $48.2 million, compared with a loss of $147.50 million a year earlier.

It reported quarterly revenue of $2.23 billion, compared with analysts’ average estimates of $2.18 billion, according to Refinitiv.