GameStop is reportedly planning to close more stores

summary

GameStop is currently undergoing a comprehensive review to identify new locations to close.
The company predicts that the process could lead to even more shutdowns than it has “in the past few years.”
GameStop has closed more than 700 stores since 2020.

GameStop The company indicated in a recent regulatory filing that it will likely continue to close stores in the near future. Although the details of the cost-cutting measure have yet to be decided, these potential closings could go beyond any that GameStop has already made in recent history.

Like many other video game retailers, GameStop's brick-and-mortar operations began to struggle with the advent of the digital age. In response to declining sales, the company has recently been trying to reimagine itself and diversify into other industries, from NFTs to business card grading. Although none of those bets have yet paid off, and GameStop's revenue has been steadily declining since 2014, the retailer's latest consolidated financial report showed a windfall of $17.4 million for the third quarter of 2024.

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While the fact that GameStop ended its most recent quarter in the green surprised some analysts, the result may not indicate that things are looking up. Instead, the retailer is currently looking to close more stores, filing with the Securities and Exchange Commission on Dec. 10. The company's latest Form 10-Q shows that it recently began a “comprehensive store portfolio optimization review” aimed at identifying new locations to close. “While this review is ongoing and a specific set of stores to close has not been identified, we anticipate that it may result in a greater number of store closures than in the past several years,” the filing said.

GameStop's SEC filing hints at hundreds of store closings

GameStop reported in March 2024 that it had closed 287 stores in the United States and abroad in the previous 12-month period. The company also closed more than 100 U.S. locations in each of 2022 and 2021. For fiscal year 2020, GameStop announced that it will close more than 400 locations worldwide. So, by saying that the continued review of its store portfolio could lead to even more reductions than those of the “last few years,” the retailer seems to be hinting at the possibility of hundreds more closings in the near future.

While this review is ongoing and no specific set of stores has been identified for closure, we anticipate that it may result in more store closures than in the past few years.

GameStop still has thousands of stores worldwide

Even after all of GameStop's efforts to cut costs, the retailer still operates more than 4,000 physical locations worldwide. Although, given its latest SEC filing, there's a reasonable chance that won't be the case for much longer. Aside from the statewide shutdown, GameStop has also scaled back its global operations, recently deciding to leave Germany permanently. Before that, the company exited Austria, Switzerland and Ireland in 2023. Its Italian branch has also been downsized recently.

Although its third-quarter 2024 profit windfall suggests the retailer's cost-cutting measures are working, GameStop will inevitably reach a point where there are no more stores to close and cut costs. If it hopes to survive in the long term, it will need to find new revenue streams before that happens. GameStop's recent decisions to invest in retro gaming, NFTs, and even a professional Sports Authenticator partnership are all attempts to do just that.

Sources: GameStop Closing List, Daily Mail

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