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GameStop misses Q4 sales expectations, hires Amazon exec

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GameStop shares tumbled on Tuesday despite a slew of high-profile hires after it reported weaker-than-expected quarterly sales during the period that coincided with the most euphoric days of the “Reddit rally.”

Shares of the video game retailer plunged more than 11 percent in late trading after it said the pandemic negatively impacted its brick-and-mortar business in the fourth-quarter, including the all-important holiday sales season.

GameStop reported a 3.3 percent slide in revenue for the 13 weeks ending Jan. 30 to $2.12 billion from $2.19 billion. Wall Street had been expecting sales of $2.21 billion.

The company reported a quadrupling of its net income of $80.5 million, or $1.19 a diluted share, but it was helped by helped by an income-tax benefit and still fell short of analysts’ expectations of $1.35 a share.

In an effort to turn its business around, however, GameStop announced a series of high-profile executive appointments, the most prominent of which was Jenna Owens, a former Amazon and Google exec who has been tapped as the retailer’s chief operating officer.

The mixed news sent shares of the Grapevine, Texas, retailer on a rollercoaster ride after hours, first rising around 8 percent before cratering over 11 percent, which represented a loss of about $20 a share from its closing price of $181.75.

GameStop has also hired Neda Pacifico, a former executive of Amazon and Chewy.com, as senior vice president of e-commerce. It tapped Ken Suzuki from Zulily as its vice president of supply-chain systems.

The new executives all begin on March 29, GameStop said in reporting its fourth-quarter results.

The widely-anticipated earnings report was GameStop’s first since the January trading mania that saw day traders using Reddit message boards to encourage each other to buy the shares in an effort to stick it to Wall Street hedges funds betting on the stock’s demise.

The hectic trading frenzy catapulted GameStop’s stock, which had been trading at under $5 a share just last year, to a high of $347.51 on Jan. 27. It’s come down in recent weeks but has still hovered around $200, or more than 10 times as it was at the start of the year.

More broadly, the trading frenzy spurred losses at big hedge funds, a congressional hearing and the development of at least two Hollywood productions.

But the company’s financial results have yet to catch up to the stock as it grapples with the challenges created by the pandemic and other long-term industry challenges, such as waning foot traffic in brick-and-mortar stores.

On Tuesday’s call with investors, GameStop Chief Executive Officer George Sherman dubbed 2020 “unprecedented” and said that the company had to shutter 693 stores during the year. While the store closures helped the company shore up $400 million in costs, it also was a clear message to the retailer that it had to shift its focus to e-commerce and improved technology.

“Our emphasis in 2021 will be on improving our e-commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue,” said Sherman. The CEO did not take questions from investors, as is customary for most earnings calls.

In order to accelerate its transition, GameStop, which currently has 4,816 doors, added Ryan Cohen, the Chewy co-founder to its board of directors to help transform the retailer.

Under Cohen’s watch, GameStop has rehauled the ranks. On Tuesday, chief customer officer Frank Hamlin announced he would resign from the company on March 31. He follows Chief Financial Officer Jim Bell who stepped down last month.

Since Cohen joined GameStop’s board in January, the 35-year-old entrepreneur has reportedly been obsessing about customer service, contacting customers late into the night to solicit feedback, pushing to upgrade the company’s Web site.

In order to strengthen GameStop’s customer service, Cohen hired Kelli Durkin, who spearheaded initiatives at Chewy that included written personal notes to customers, as the retailer’s new senior vice president of customer care.

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Glasses retailer Warby Parker eyeing IPO as soon as this year

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Hipster glasses retailer Warby Parker is eyeing an initial public offering.

The 11-year-old business, which started out as an e-tailer before rolling out some 130 stores across the US, is considering an IPO as early as this year, Bloomberg reported on Wednesday.

The New York-based company has amassed a huge customer following by offering less expensive prescription glasses. Warby Parker raised $120 million in its most recent funding round giving it a $3 billion valuation, according to the report.

“We’ve always explored various financing opportunities in both the debt and equity markets,” the company said in a statement. “To date, we have successfully and deliberately raised money within the private market on favorable terms and have plenty of cash on our balance sheet. We’ll continue to make strategic decisions in line with our commitment to sustainable growth.”

Founded by college buddies Dave Gilboa and Neil Blumenthal, who met at the Wharton School at the University of Pennsylvania, Warby Parker has attracted some large investors including the mutual fund company, T. Rowe Price.

It turned it first profit in 2018, Gilboa told The New York Times at the time.

Warby Parker co-founder Neil Blumenthal
Warby Parker co-founder Neil Blumenthal
Brian Ach/Getty Images

Customers can get prescriptions through their apps on their smartphones and use cameras to pick out frames. The company also has an optical lab in Sloatsburg, NY where it produces lenses.

While Warby Parker is not the least expensive option, it beats Costco in a recent comparison with Costco charging as little a $126 for a pair of prescription glasses compared with Warby Parker’s least expensive pair at $95.

“As consumer walk into a LensCrafters or Sunglass Hut, they see 50 different brands of glasses but don’t realize that all those brands are owned by the same company that owns the store that they’re standing in, that probably owns the vision insurance plan they’r using to pay for those glasses,” Gilboa said in a recent CNBC interview.

“And so, it’s no surprise that a lot of those glasses are marked up 10 to 20 times what they cost to manufacture,” he said.

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Dogecoin hits new high boosted by DogeDay hashtags

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Dogecoin prices hit an all-time high on Tuesday, with a market capitalization above $50 billion, after social media fans used hashtags to fuel a rally in the meme-based cryptocurrency.

An 8,000 percent price surge this year has seen Dogecoin, which was launched as a satirical critique of 2013′s cryptocurrency frenzy, overtake more widely-used cryptocurrencies like Tether to become the fifth-largest coin.

While Dogecoin, whose logo features a Shiba Inu dog at the center of the meme, a represents only a fraction of bitcoin’s $1 trillion value, it can be traded on crypto exchanges and more popular mainstream trading apps.

“The Doge rally represents an interesting convergence,” said Diana Biggs, CEO of crypto start-up Valour, after Dogecoin’s price soared by more than five-fold in the last week to a record 42 cents, according to CoinMarketCap.

“A meme coin created as a joke for early crypto adopters whose community found that kind of thing to be fun, with now a new generation of retail investors for whom memes are a native language,” Biggs added.

Dogecoin fans used the hashtags #DogeDay and #DogeDay420 to post memes, messages and videos on Twitter, Reddit and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.

“GIMME THAT DOGECOIN LAMBO!!! #DogeDay” one tweeted, referring to the Lamborghini car popular in crypto culture.

Dogecoin’s rise has come amid a surge in online trading of stocks and crypto by retail investors, stuck at home with extra cash because of the COVID-19 pandemic. It has not coincided with a growth in usage of the coin for payments or in commerce.

The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social-media driven rally in GameStop stock that pitted retail investors against hedge funds earlier this year.

“It’s an extension of the same phenomenon that has led Tesla stock to be valued well beyond fundamentals and more recently to the GME (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralised finance startup Aave.

Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users including Tesla chief Elon Musk, whose tweets on the cryptocurrency in February sent its price soaring over 60 percent.

“If this goes as planned and everybody including Mr. Musk go ahead and just pour money into Doge on April 20th all at once Doge will reach prices that originally were not even conceptual,” a TikTok user said in a video promoting the coin.



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Amazon is opening a beauty salon in London

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Amazon is opening a hair salon in London — its latest odd lurch into new businesses as the pandemic continues to fuel the e-commerce giant’s torrid growth.

The Amazon Salon, unveiled in a Tuesday blog post, will occupy a two-story, 1,500-square-foot space in Spitalfields, a trendy neighborhood in East London that is also home to Amazon’s UK headquarters, which houses about 5,000 employees.

Indeed, the new salon, which will be open seven days a week, initially will only cater to Amazon workers. Members of the public will be able to make bookings in “the coming weeks” by calling, emailing or visiting the salon, the company says.

“This will be an experiential venue where we showcase new products and technology,” Amazon said in a blog post on Tuesday, adding that there are no plans to open other salons.

That will include making Amazon’s Fire tablets available at each station, allowing customers to use augmented reality technology to see what they look like as a platinum blonde, brunette or with highlights, the company said.

The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
Amazon

The salon will also test new “point-and-learn” technology, where customers can point at a product they are interested in on a display shelf and the relevant information, including brand videos and educational content, will appear on a display screen.

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