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Dive Brief:
As it continues to evaluate its store footprint, GameStop’s first quarter net sales dropped about 17% year over year to $732.4 million, according to a company press release Tuesday.
The retailer swung to a $44.8 million net income, compared to a $32.3 million loss in Q1 last year. Additionally, operating loss improved from $50.6 million to $10.8 million in the most recent quarter, factoring in $35.5 million of impairment charges “related to international restructuring efforts,” per the release.
Sales dropped 26.7% in GameStop’s software category, while hardware and accessories declined 31.7%. Meanwhile, collectibles net sales increased 54.6% in the quarter.
Dive Insight:
GameStop’s sales slump in key categories comes as the retailer says it is focused on establishing “omnichannel retail excellence,” per a Securities and Exchange Commission filing.
The company, which did not hold an earnings call or provide forward-looking guidance, is aiming to become a leading destination for gaming and entertainment through its online platform and physical stores. However, the retailer has actively shrunk its overall store footprint, closing nearly 600 U.S. locations last year.
GameStop has also turned an eye to its global operations, winding down or pursuing sales of its business in several international markets including Canada, Italy, Germany and France. In Q1, GameStop said it recognized an $18.3 million impairment expense related to the Canadian exit and an impairment expense of $17.2 million on the French departure.
GameStop plans to close further stores in fiscal 2025, but has yet to identify specifics.
GameStop’s gross profit increased 3.4% to $252.8 million in Q1, mainly due to “a shift to higher margin product categories, specifically collectibles and preowned hardware and accessories,” per the SEC filing. The retailer’s Q1 results preceded the release of the highly sought-after Nintendo Switch 2 gaming console, which launched on Thursday and is available for purchase at GameStop, in addition to other retailers.
Notably, the retailer hasn’t been shy when it comes to investment in cryptocurrency. The company purchased 4,710 bitcoins in May, worth around $500 million at the time of purchase. The company’s board had voted unanimously to add bitcoin as a treasury reserve asset in March.
While its interest in cryptocurrency has increased under CEO Ryan Cohen, the company shuttered its NFT marketplace “due to the continuing regulatory uncertainty of the crypto space” in 2024.
The retailer’s annual stockholder meeting will be held on Thursday.