MV TELEGRAPH

GameStop on Tuesday posted quarterly earnings for the first time in two years and ended its fiscal year on a strong note in the holiday quarter after grappling with falling sales, inventory issues and cash flow pressures.

The company’s shares are up more than 45% during after-hours trading.

For the quarter ended January 28, net sales decreased slightly to $2.23 billion starting at $2.25 billion in the fourth quarter of last year. The video game retailer also posted a profit of $48.2 million, or 16 cents a share, compared to a loss of $147.5 million, or 49 cents, a year ago.

GameStop has not provided financial guidance and has not done so since the early days of the pandemic. The results cannot be compared to Wall Street estimates because too few analysts cover the company.

The retailer had been working to return to profitability and did so in part by cutting costs. SG&A expenses for the quarter were $453.4 million, or 20.4% of revenue, compared to $538.9 million, or 23.9% of revenue, in the prior-year period.

A GameStop store operates in a mall on March 16, 2023 in Chicago, Illinois.

Scott Olson | Getty Images

Speaking to investors, CEO Matt Furlong said the company is entering 2023 with further plans to cut excess costs, including in European markets where it has already exited and started to pull out of some countries. He said GameStop is also considering strengthening its business in higher-margin categories like toys.

GameStop had previously sustained some short-term meme-stock momentum, but that has since settled and the company has made strides in sizing its business by cleaning up its inventories and revising its cost structure.

The stock closed Tuesday’s trading at around $18 a share, a dramatic drop from its 52-week high of nearly $50 about a year ago.

GameStop’s turnaround plan was reinvigorated with a leadership reshuffle in 2021, the Furlong Amazon Veteran, at the helm and added Ryan Cohen, Tough Founder and Alumni bed bath beyond activist investor as CEO. The company also laid off employees and replaced its chief financial officer.

The retailer has been working to overhaul its real estate portfolio and grow its online business as the video game industry moves in that direction.

For the full fiscal year, GameStop reported revenue of $5.93 billion, down slightly from $6.01 billion in fiscal 2021, and reported higher revenue from its collectibles category, which the retailer expects they will support long-term growth.

Like many retailers, GameStop experienced supply chain delays that led to an inventory backlog after previously trying to meet high demand. The company is still holding inventories at $682.9 million, according to its fourth-quarter balance sheet, down from $915 million a year ago.

As part of its revival strategy, GameStop has also sought to improve its cash stash. During the quarter, its cash and cash equivalents were $1.39 billion.

In addition to handling the burdens of its brick-and-mortar presence, the company has also been working to find its digital identity. So far, these experiments have met with some missteps.

In September, it launched an ill-fated partnership with now-bankrupt crypto exchange FTX. The companies had planned to collaborate on e-commerce marketing, and GameStop wanted to sell FTX gift cards in its stores. Two months later, GameStop tweeted that it would “wind up” the partnership and issue a refund to anyone who purchased an FTX gift card from its stores.

The company has also been experimenting with an NFT marketplace since July. This launch came amid talk of a “crypto winter” as cryptocurrencies experienced a widespread cooldown from their 2021 rallies. The marketplace saw an initial surge in volume, but has since leveled off and may not be the ticket to a stable digital presence that the company was hoping for.

Still, speaking to investors, Furlong said the company is better positioned compared to 2021, when many “predicted we were heading for bankruptcy.”

“GameStop is a much healthier business today than it was in early 2021,” he said.

Virgin Orbit’s LauncherOne rocket on display in Times Square, New York.

CNBC | Michael Sheetz

Virgo Orbit is scrambling to secure a funding lifeline and avoid bankruptcy, which could come as soon as this week without a deal, CNBC has learned.

The rocket maker suspended operations last week and furloughed most of the company, CNBC first reported, while it looked for new investments or a possible acquisition.

Virgin Orbit CEO Dan Hart and other senior executives held daily meetings throughout the weekend with interested parties, according to people familiar with the matter, who asked not to be identified to discuss internal matters.

During an all-hands meeting last week, Hart told employees the company hopes to provide an update on the situation as early as Wednesday.

Meanwhile, top talent is already entering the job market, with many of Virgin Orbit’s approximately 750 employees looking for jobs elsewhere. This talent ranges from executives to senior and senior engineers to program managers who are actively seeking and finding new jobs, according to a CNBC analysis.

While a door remains open to avoid bankruptcy, those close to the situation describe a sense of panic as the company struggles to close a deal. A potential buyer turned down a proposed sale price of nearly $200 million, one person told CNBC — a price just under the company’s market value as of Friday’s close.

At the same time, Virgin Orbit is preparing for a possible bankruptcy filing later this week, one person said. Virgin Orbit hired two firms — Alvarez & Marsal and Ducera Partners — to draw up restructuring plans in the event of bankruptcy, CNBC learned. Sky News first reported the companies had been shut down.

A Virgin Orbit spokesman declined to comment.

Virgin Orbit shares have continued to fall since the pause in operations, with the stock slipping to close at $0.52 a share on Monday.

The company developed a system for sending satellites into space that uses a modified 747 jet that ejects a missile under the plane’s wing mid-flight. Its final mission suffered an in-flight failure and its rocket failed to reach orbit.

Richard Branson’s Virgin Orbit, with a rocket under the wings of a modified Boeing 747 jet, lifts off from Mojave, California on July 10, 2019 for a major drop test of its high-altitude satellite launch system.

Mike Blake | Reuters

The company was spun off from Richard Bransons Virgo Galactic in 2017 and counts the billionaire as its largest shareholder with a 75% stake. Mubadala, the Emirates’ sovereign wealth fund, holds the second largest stake in Virgin Orbit at 18%.

But the company is struggling to shore up its coffers. It went public in December 2021 just before the end of the SPAC madness and was unable to enter the fundraising markets in the same way as its sister company Virgin Galactic, which was increasing its cash reserves through stock and debt sales than $1 billion topped up.

Virgin Orbit sought to raise $483 million through its SPAC litigation, but significant redemptions raised less than half of that, raising gross proceeds of $228 million. The funds it could raise came from Boeing and AE Industrial Partners, among others.

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Virgin Orbit has been searching for a financial lifeline for several months. Branson was unwilling to continue funding the company, sources said, and instead shifted its strategy to value preservation.

Since the fourth quarter, Virgin Orbit has raised $60 million in debt from the investment arm of Branson’s Virgin Group, giving it top priority over Virgin Orbit’s assets. Around the same time, Virgin shut down Orbit Goldman Sachs And Bank of America to explore other financial opportunities ranging from a minority stake to an outright sale.

George Mattson, who sits on Virgin Orbit’s board of directors, was heavily involved in the company’s sale process, people told CNBC. Mattson spent nearly two decades as a banker at Goldman Sachs before co-founding the SPAC called NextGen, which took Virgin Orbit public at a valuation of $3.7 billion.

Virgin Orbit said in a filing filed Monday that it has approved a severance plan for top executives if they are terminated “following a change of control” of the company. The plan covers Hart, as well as Chief Strategy Officer Jim Simpson and Chief Operating Officer Tony Gingiss, and includes payout of base salary and annual bonuses. If fired, Hart would receive cash compensation equal to 200% of his base salary, or $511,008, according to FactSet.

Mickey Mouse, Minnie, Donald, Daisy, Clarabelle, Goofy, Pluto and Pete stand in front of Mickey’s house in the renovated Toontown at Disneyland.

Disney

Parkgoers at Disneyland in Anaheim, California can finally return to Mickey’s Toontown this weekend after a year-long closure for renovations.

The cartoon-inspired land has long been a haven for Disney’s younger parkgoers, offering meet-ups with characters like Mickey Mouse, Minnie, Donald, Goofy and Pluto, as well as kid-friendly roller coasters and play areas.

The redesigned Toontown honors the space that first opened in 1993 and keeps existing structures like Mickey and Minnie’s homes intact, albeit with a color touch-up. But there is also some new infrastructure for children to discover – with a view to inclusion.

At its core, the Toontown revamp is all about intent. Imagineers have designed a space for all children and created accessible play areas, quiet areas and shady spots so that the youngest park visitors have a place to release their pent-up energy or relax.

The redesigned site, which opens to the public on March 19, is fully wheelchair accessible, including its slides, and is visually and aurally accessible to children who are easily overwhelmed by loud or bright sensory stimuli. All of the land has been repainted in softer colors, and some areas feature more subdued, spa-like musical scores.

“We want every child to know that when they came to this country, this land was meant for them,” said Jeffrey Shaver-Moskowitz, Executive Portfolio Producer at Walt Disney Introduce. “That they were seen and that this place welcomed them.”

Shaver-Moskowitz said the Imagineers spent time checking out children’s museums and water playgrounds to see how kids are getting involved, and developed different stations across the country to accommodate different types of play patterns.

“We know that a day at Disneyland can be hectic and chaotic, from one attraction to the next, from one reservation to the next,” he said. “We wanted Toontown to be not only exciting, but relaxing, relaxing and welcoming.”

With this in mind, the Imagineers have created more green spaces within the country, places to picnic, sit and relax, or play freely.

“We were keen to take a look at Toontown, knowing how important it has been for so many of our guests for many generations to grow up and the many memories here that are tied to the country and make sure we don’t lose any of the” , Shaver-Moskowitz said, “But bring lots of new magic.”

“Think of every single guest”

As guests enter the new Toontown, they pass through Centoonial Park. The area is anchored by a large fountain featuring Mickey and Minnie, water tables for children to dip their hands in and the “dreaming tree”.

The live tree was chosen from Disney properties for its cartoonish branches and foliage. Molded roots surround the trunk for children to climb over, crawl under and slip through.

“One of the most important play functions for little ones is learning the concepts of over, under and through,” Shaver-Moskowitz explained during a media tour of the country earlier this month. “So you’ll see that some of the roots are big enough for little ones to crawl under, some of them can be used as balance beams for little ones learning to get their feet under.”

(There’s also a wheelchair-accessible path that goes through the roots.)

Centoonial Park is also adjacent to the El Capitoon Theater, home of Mickey and Minnie’s Runaway Railway Ride. Riders are invited to the premiere of Mickey and Minnie’s newest animated short, Perfect Picnic. However, fun ensues and the guests are taken on a ride on Goofy’s train and enter the cartoon world.

The El Capitoon Theater exterior from Mickey and Minnie’s Runaway Railway Ride at Disneyland in Anaheim, California.

Disney

The trackless ride has no size or age restrictions, so even the littlest Disney guests can join in.

Continuing across the country, guests will see Goofy’s new playground, which extends around Goofy’s house and features a sound garden filled with musical bridges and melons, and Fort Max, a climbable clubhouse with attached slides.

Shaver-Moskowitz said the roller slides were chosen for space so smaller guests, who often have less mobility in their legs, don’t get stuck at the bottom of the slide. There is also more space at the bottom of the slides to accommodate guests who need time to get back into the wheelchair.

“We try to make sure that we think of every single guest here,” he said. “We have to make sure that every child who comes here feels that we designed the space for them.”

Also outside is a small cordoned off area for babies to crawl around and safely experience the area.

Goofy stands in front of his new How-To-Play Yard in Mickey’s Toontown at Disneyland.

Disney

At Goofy’s house there are a number of games that children can play to help Goofy process honey from the beehives on his property into candy. Here, little park-goers can sort candies by taste and color, and watch as a kinetic ball machine activates around the room.

Special care was taken to suppress the sound of the air compressors pushing the balls around, Shaver-Moskowitz said, to ensure those with sensory sensitivities aren’t overwhelmed and can still enjoy the experience as much as their peers.

In a separate area next to Goofy’s new playground is Donald’s Duck Pond, a water adventure for kids. Imagineers intentionally separated this space from the playground so parents could better monitor their children around the water elements.

Donald Duck stands in front of the new Duck Pond in Mickey’s Toontown at Disneyland.

Disney

Shaver-Moskowitz noted that the earlier design of the site meant that children would occasionally run back to their parents soaking wet after wandering into the water playground.

Donald’s Duck Pond features a tug that spits water, spinning lily pads, balance beam and rocking toys. Inside the boat, kids can help Tick, Trick, Track and Webby with a hull leak by turning wheels and levers to push the water out.

Pack a picnic

The Imagineers have also revamped the food in Toontown. New restaurants like Cafe Daisy and Good Boy! Grocers offer a wide variety of choices and flavors for young park-goers and more mature palates.

Michele Gendreau, Director of Product Optimization for Food and Beverage, explained that the team wanted to make eating easier by holding food that can be chewed on the go.

The menu at Daisy’s Café features flop over pizzas, hot dogs and wraps. Adults can grab a cold brew coffee or sweet honey mango tea here. For dessert there are mini donuts coated with cinnamon sugar.

“Kids want to eat what their parents eat,” Gendreau said, highlighting kid-friendly versions of traditional pizzas.

By good boy! Grocers, guests can buy drinks, snacks and novelties to take away. The roadside stand offers the “perfect picnic basket” with up to three snacks and a drink. Kids can choose from a variety of options, from hummus and pickles to granola bars and apple slices.

Baskets are set at multiple heights to allow even the smallest diners to select their own items, giving them a little autonomy when it comes to mealtime.

Merchandise from Mickey’s Toontown at Disneyland.

Disney

Park visitors can shop for picnic blankets, t-shirts, toys, and other exclusive Toontown merchandise at EngineEar Souvenirs.

Also, meet-and-greets with fan-favorite characters are returning to the country. Guests can take photos with Mickey Mouse, Minnie, Donald Duck, Daisy, Pluto, Clarabelle, and Goofy. And for the first time at a Disney park, Pete will show up and wreak havoc on the neighborhood.