Weekly Earnings Outlook

Update 11 December

Transaction Capital (JSE: TCP) Posts Significant Loss, Focuses on SA Taxi Restructuring

Transaction Capital has announced a substantial loss for the year ended September 30, 2023, driven primarily by challenges faced by its core business, SA Taxi. Despite the financial strain, the company remains committed to restructuring SA Taxi and positioning it for future success.

The company reported a headline loss of R3.7 billion, significantly higher than the R2.1 billion loss in the first half of 2023. This translates to a substantial decline of 81% in core EPS from continuing operations, falling from 172.5 cents to 32.2 cents.

SA Taxi, the heart of Transaction Capital’s business, faced significant challenges during the year. The company incurred substantial write-downs on repossessed vehicles, contributing heavily to the overall loss. SA Taxi is undergoing a major operational and financial restructuring to address these issues. This initiative aims to stabilize the business, streamline operations, and reduce costs. The restructuring is expected to be completed by March 2024 and is crucial for SA Taxi’s future sustainability.

Transaction Capital is actively working with SA Taxi’s debt funders to find a solution for the business’s financial stability. Reaching a successful agreement is essential for providing SA Taxi with the resources needed to execute its restructuring plan.

GameStop Corp (NYSE: GME)

GameStop has reported a significant improvement in its financial performance for quarter 3 ended October 28, 2023. While net sales experienced a slight decline year-over-year, the company narrowed its net loss and strengthened its financial position substantially.

Compared to a staggering $94.7 million loss in the previous year’s third quarter, the company managed to limit its losses to a mere $3.1 million this time around. Furthermore, GameStop’s financial fortress has been strengthened significantly thanks to a robust cash position. As of October 28, 2023, the company boasted a healthy $1.210 billion in cash, cash equivalents, and marketable securities, providing ample flexibility for future investments and strategic initiatives.

CEO Matt Furlong expressed optimism and confidence in the company’s progress. “We are pleased with our improved results as we significantly reduced our net loss, improved our gross margin, and significantly strengthened our balance sheet. We are confident in executing our long-term strategy and look forward to the future of GameStop.”

Dollar General Corp. (NYSE: DG)

The company witnessed a 1.8% decline in its stock price on Thursday, December 7, 2023, despite exceeding analysts’ expectations for third-quarter earnings and maintaining its full-year guidance. This unexpected dip raises questions about investor sentiment towards the discount retailer.

The company reported a strong third quarter, surpassing analyst estimates for earnings per share with $1.26 against the expected $1.20. However, this positive news was tempered by a slight decline in same-store sales, raising concerns about customer engagement and future growth. Adding to the uncertainty, the recently reinstated CEO, Thomas Quest, expressed dissatisfaction with the company’s performance. He cited factors such as lower-than-expected average transaction amounts and inventory shrink as key areas of concern. While reiterating confidence in the company’s long-term strategy and maintaining the full-year guidance, Quest’s negative statement may have triggered investor anxieties.Sources: Moneyweb; Sharenet; Transaction Capital; GameStop; Market

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