Out of Meme Magic: GameStop Announces Widespread Store Closures

Struggling video game retailer and notorious meme stock GameStop has revealed its intention to close a significant number of stores across the United States after shutting down 300 locations in the previous year. One analyst noted, “GameStop has virtually no chance of returning to profitability in its core business.”

The Daily Mail reports that GameStop, the well-known video game retailer, is facing challenging times as it grapples with declining sales and profitability. The company recently announced its plans to close a substantial number of stores nationwide, following the closure of 300 locations last year. The number of stores that will shut down is not yet known. This move comes as part of GameStop’s comprehensive store portfolio optimization review, which aims to streamline operations and adapt to the changing retail landscape.

According to the company’s filing with the SEC, net sales have dropped by 20 percent, now standing at $860 million compared to $1.08 billion in 2023. Despite still generating income, GameStop’s core business operations continue to decline, as noted by Wedbush analysts. They stated, “GameStop has virtually no chance of returning to profitability in its core business.”

The exact locations slated for closure have not been determined yet, as the company’s review process is still ongoing. However, GameStop anticipates that the number of store closures may exceed those of previous years. The retailer, founded in 1984, has been struggling to maintain its foothold in the market as consumers increasingly shift towards digital downloads, streaming services, and online shopping for their gaming needs.

In March, GameStop reported the closure of 287 stores worldwide over the past 12 months, reducing its physical presence to just over 4,000 locations. The announcement led to a 15 percent drop in the company’s shares, with a further decline of more than seven percent in September. As more stores are expected to close, GameStop is exploring the introduction of new services and products to expand its market reach.

One such initiative is the collaboration with Collectors Holdings through its Professional Sports Authenticator (PSA) division, which allows GameStop to become an authorized PSA dealer. This partnership enables the retailer to offer trading card authentication and grading services at select stores nationwide. However, Wedbush analysts remain skeptical about the impact of this new addition on the company’s overall performance, noting that it follows “failed attempts at an omnichannel strategy and at NFT trading.”

The analysts also highlighted the significant decline in annual revenue, with hardware and accessory sales plummeting by 28 percent and software sales falling by 15 percent. Additionally, collectible sales have experienced a 3.7 percent decrease, according to Retail Dive.

Beyond the United States, GameStop has announced plans to cease operations in Germany by the end of the current fiscal year. The company is also slowing down its activities in Italy after completely withdrawing from Ireland, Austria, and Switzerland in 2023.

GameStop was the epicenter for the meme stock craze of 2021 that caused severe losses for financial firms betting against the company’s future. As recently as June of this year, the company’s shares spiked based on meme stock trading.