Video games retailer GameStop Corp reported a decrease in revenue and a greater loss in the second quarter of 2022. The revenue of the company decreased to $1.14 billion in Q2 2022 from $1.18 billion in Q2 2021. The company’s losses increased to $108.7 million from $61.6 million YoY, or 21 cents per share. The company recorded a loss of 35 cents per share on an adjusted basis in comparison to a loss of 19 cents per share during the corresponding period in the previous year. The value of the company’s shares decreased significantly, adding to a nearly 36% decline so far in 2022.
Collaboration with Crypto Exchange FTX
GameStop announced a partnership with cryptocurrency exchange FTX. The collaboration is aimed at bringing more GameStop consumers to the FTX community and its marketplace for digital assets. In addition to working with FTX on a new ecommerce and online marketing initiative, GameStop will begin stocking FTX gift cards in some of its stores. The company introduced an NFT marketplace in July 2022 that enables customers to link their digital asset wallets, including the recently released GameStop Wallet, to purchase, sell, and exchange NFTs for virtual products.
Increasing Cost is a Challenge
GameStop’s inventory increased to $734.8 million in the second quarter of 2022 in comparison to $596.4 million in the second quarter of 2021. Revenue from hardware and software declined, but this was compensated by the increase in sales of collectibles. The company is focusing on major objectives such as increasing profitability, introducing proprietary products, and investing in its stores. However, the new initiatives came at a high cost. The company’s struggles to increase profitability forced it to reduce spending. It cut some critical managerial positions and effected department-wide layoffs.
The quarterly results of GameStop come at a time when the demand for video games slowed after reaching new highs during the COVID-19 pandemic, casting questions on the ability of gaming companies to survive an economic downturn.
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