GameStop (GME) is dipping its toes in a new venture as it struggles with sales.
In GameStop’s fourth-quarter earnings report for 2024, it revealed that its net sales declined by about 28% year-over-year during the quarter.
The shrinkage in sales during the 2024 holiday season comes after it warned its investors in a Securities Exchanges filing last year that digital gaming was a major threat to its business.
Related: GameStop makes a drastic move amid weak sales
“Downloading of video game content to the current generation video game systems continues to grow and take an increasing percentage of new video game sales,” said GameStop in the filing. “If consumers’ preference for downloading video game content instead of physical software continues to increase, our business and financial performance may be adversely impacted.”
Despite facing headwinds in its brick-in-motor business, GameStop managed to generate a net income of $131.3 million during the fourth quarter, which is about 108% higher than what it earned during the same quarter in 2023.
In addition, the retailer also revealed that it generated roughly $4.7 billion in cash alone towards the end of the quarter.
GameStop announces surprising new venture
In a recent 10-K SEC filing, GameStop revealed that it closed 590 stores in the U.S. in 2024, it also said that it plans to close a “significant number” of stores this year.
“We have also initiated a comprehensive store portfolio optimization review which involves identifying stores for closure based on many factors, including an evaluation of current market conditions and individual store performance,” said GameStop in the filing.
People walk by a GameStop store.
Image source: Shutterstock
The retailer also announced that while it will be shrinking its retail footprint, it will also be investing “a portion” of its “cash or future debt and equity issuances” into Bitcoin.
“We have not set a maximum amount of Bitcoin we may accumulate, and may sell any Bitcoin we may acquire,” said GameStop in the filing.
Related: Dollar General CEO flags alarming shift in customer behavior
Investing in Bitcoin, which is the first-ever cryptocurrency, can have high risks. First, the value of cryptocurrency can dramatically go up and down, offering high rewards or major losses. Also, cryptocurrency isn’t regulated like stocks or protected by the banks, it has no government regulation in the U.S.
Many investors and merchants rely on third parties to exchange or store their cryptocurrency, which makes it more prone to theft or hacking. There is also currently no way to reverse or cancel a cryptocurrency transaction once it has been sent.
GameStop joins a concerning trend in retail
GameStop isn’t the only major retailer that announced store closures this year. Joann, Khol’s and Forever 21 also announced store closures within the past few weeks.
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According to recent data from Coresight Research, retailers in the U.S. closed 7,325 stores in 2024, which is the highest number of store closures since 2020. Coresight Research expects store closures in the U.S. this year to escalate to 15,000.
“Inflation and a growing preference among consumers to shop online to find the cheapest deals took a toll on brick-and-mortar retailers in 2024,” said Coresight Research CEO Deborah Weinswig in a Jan. 23 press release. “Last year we saw the highest number of closures since the pandemic. Retailers that were unable to adapt supply chains and implement technology to cut costs were significantly impact
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