GameStop's first-quarter revenue declines as online gaming demand rises
FILE PHOTO: A screen displays the logo and trading information for GameStop on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 29, 2022. REUTERS/Brendan McDermid/File Photo
(Reuters) -Videogame retailer GameStop reported a decline in first-quarter revenue on Tuesday as customers increasingly opted for digital downloads over purchases at its brick-and-mortar stores, sending its shares down 4.6% in after-hours trading.
The Grapevine, Texas-based company, known for its rollercoaster stock performance and Reddit-fueled rally in 2021, has long struggled to adapt to the rapidly changing gaming industry as consumer preferences shift away from physical game purchases towards digital downloads, game streaming and online shopping.
Despite expanding its ecommerce platform to include digital downloads and online merchandise, GameStop is yet to fully capitalize on the shift.
Revenue from its hardware and accessories unit, which includes sales from new and pre-owned video games, dropped about 32% in the reported quarter.
Following the closure of nearly 600 U.S. stores in 2024, the company also announced the closing of a "significant number" of additional stores this year, signaling that its retail business continued to flounder in spite of turnaround attempts.
The company's efforts to reduce costs helped it report a net profit of $44.8 million for the first quarter, compared with a net loss of $32.3 million a year ago.
Early in May, GameStop sold its Canadian subsidiary, Electronics Boutique Canada, which operated its Canadian stores and e-commerce business. GameStop expects the sale of its operations in France to close during fiscal year 2025.
It reported an operating loss of $10.8 million in the quarter, which includes $35.5 million of impairment charges related to international restructuring efforts.
GameStop revealed that it purchased 4,710 bitcoins between May 3 and June 10 for cash. It had said in March that the board had approved the addition of bitcoin as a treasury reserve asset.
The company's first-quarter revenue fell 17% to $732.4 million, compared with $881.8 million a year ago.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Pooja Desai)
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