GameStop Goes From ‘Brink of Bankruptcy’ to Profits
GameStop’s turnaround continued this week as the company reported its first profit in years.
The video game retailer announced in a Tuesday (March 21) earnings release that it had seen a net profit of $48.2 million in the quarter that ended in January, versus a $147.5 million loss recorded the same quarter a year ago.
The company’s stock, down 41% over the past year, jumped nine points Wednesday (March 22) in pre-market trading.
“GameStop is a much healthier business today than it was at the start of 2021,” CEO Matt Furlong said during the company’s earnings call.
In December — after GameStop reported another quarter of losses and declining sales — Furlong had tried to reassure investors that the company was on a path to near-term profitability.
“We’re attempting to accomplish something unprecedented in the retail sector,” he said at the time. “We’re seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy into a retailer that meets customers’ needs through our stores, e-commerce properties and emerging sales channels.”
As PYMNTS wrote last year, GameStop had for some time been trying to move into the digital world, as most gaming activity now takes place online.
Among the company’s digital efforts have been a doomed collaboration with collapsed cryptocurrency company FTX, launched in September and designed to “introduce more GameStop customers to FTX’s community and its marketplaces for digital assets.”
The partnership involved GameStop selling FTX gift cards in some stores, as well as plans to work with FTX on eCommerce and online marketing initiatives.
However, two months after the partnership — the same week FTX’s collapse began — GameStop announced on Twitter that it was “winding down” its relationship with the crypto firm.
GameStop is winding down its relationship and pilot gift card marketing partnership with https://t.co/gdWhkfJkDH and will be providing full refunds to impacted customers. Please reach out to customer service if you purchased a gift card.
— GameStop (@GameStop) November 11, 2022
Furlong would later address the company’s crypto ambitions in the December earnings call, saying that GameStop “proactively minimized exposure to cryptocurrency risk throughout the year and does not currently hold a material balance of any token.”
And while Furlong said he thinks there’s still a long-term potential for digital assets in the gaming world, the CEO dismissed any return to that category.
“We have not and will not risk meaningful stockholder capital in the space,” he said at the time.
Also last year, GameStop debuted a non-fungible token (NFT) marketplace where gamers, creators and collectors can buy, sell and trade digital art collectibles.
The company’s latest earnings report showed net sales were down slightly, from $6 billion to $5.9 billion for the year, with quarterly sales falling from $2.3 billion to $2.2 billion.
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