Dive Brief:
- GameStop’s third-quarter net sales fell 20% to $860 million, down from $1.08 billion last year, the company said Tuesday. The retailer swung from a year-ago net loss of $3.1 million to net income of $17.4 million.
- The company’s year-over-year operating loss for the 13 weeks ended Nov. 2 rose to $33.4 million, up from $14.7 million. Gross profit declined to $257.2 million from $281.8 million a year ago.
- The company is continuing its comprehensive store portfolio review, which involves identifying store closures, according to a filing with the U.S. Securities and Exchange Commission. The company anticipates that the review may result in the closure of a larger number of stores than in previous years.
Dive Insight:
Although GameStop is generating income, the company appears to have no strategy to deploy the capital and its operations are continuing to lose money, Wedbush analysts led by Michael Pachter said in a Wednesday note.
“GameStop has virtually no chance of returning to profitability in its core business,” the analysts wrote.
However, GameStop said it has an opportunity to increase the size of its addressable market through new products and services. In October, GameStop announced it had entered a collaboration with Collectors Holdings through its Professional Sports Authenticator division. As part of the collaboration, GameStop became an authorized PSA dealer, providing trading card autograph authentication and grading services at select U.S. GameStop stores.
But Wedbush’s analysts are skeptical the retailer’s latest strategic venture will move the needle. “Its entry into the trading card business follows failed attempts at an omnichannel strategy and at NFT trading,” the analysts said in their note.
Year over year net sales were down for the quarter for the company’s three main product categories. Hardware and accessory sales declined 28% to $417 million; software fell 15% to $271.8 million; and collectibles declined 3.7% to $171.1 million.
“Revenue continues to fall dramatically year-over-year as GameStop closes stores and more games are sold digitally,” Wedbush’s analysts said.
Meanwhile, the retailer is continuing to shrink its overall store footprint. The company said in a regulatory filing it plans to wind down its operations in Germany by the end of this fiscal year. It also is divesting its operations in Italy. In 2023, GameStop ended its operations in Ireland, Switzerland and Austria.
