GameStop’s turnaround continued this week as the company reported its first profit in years.
The video game retailer reported a net profit of $48.2 million for the quarter ending in January in an earnings report published on Tuesday (March 21), compared to a loss of $147.5 million for the same period in 2016.
On Wednesday (March 22) before the market opened, shares of the company, which had fallen 41% in the previous 12 months, rose by 9%.
GameStop is in better financial shape now than it was at the beginning of 2021, CEO Matt Furlong said on the earnings call.
Furlong had tried to reassure investors that GameStop was on a path to near-term profitability after the company reported another quarter of losses and declining sales in December.
We’re trying to do something completely new in retail, he said. From “a legacy brick and mortar business on the verge of bankruptcy,” to “a retailer that meets customers’ needs through our stores, e-commerce properties, and emerging sales channels,” that is our goal.
GameStop, as reported by PYMNTS earlier this year, has been trying to expand its business into digital platforms in light of the fact that most gamers now conduct their activities online.
The partnership with the now-defunct cryptocurrency company FTX, announced in September, was meant to “introduce more GameStop customers to FTX’s community and its marketplaces for digital assets,” but it ultimately failed.
The partnership involved GameStop selling FTX gift cards in some stores, as well as plans to work with FTX on eCommerce and online marketing initiatives.
In the second month of their partnership, however, GameStop announced on Twitter that it was “winding down” its relationship with the crypto firm, coinciding with the week that FTX began its collapse.
GameStop is winding down its relationship and pilot gift card marketing partnership with https://t.co/gdWhkfJkDH and will be providing full refunds to impacted customers. Please reach out to customer service if you purchased a gift card.— GameStop (@GameStop) November 11, 2022
In the December earnings call, Furlong would elaborate on GameStop’s cryptocurrency plans, saying that the company had “proactively minimized exposure to cryptocurrency risk throughout the year and does not currently hold a material balance of any token.”
Despite Furlong’s assertion that digital assets still have promising futures in the gaming industry, the CEO has ruled out any comeback.
They have not and will not risk material stockholder capital in this area, he said.
The retail giant GameStop also introduced a marketplace for digital art collectibles using non-fungible tokens (NFTs) last year.
According to the most recent financial report, the company’s annual net sales dropped from $6 billion to $5.9 billion, and quarterly net sales dropped from $2.3 billion to $2.2 billion.