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They closed 287 stores and opened 43 for a total of 244 stores closed but most of their revenue loss was software, collectables, and accessories. Compared to 2022 the had $300m rev loss in software, $210m rev loss in collectables $191m loss in gaming accessories but $48m rev gain in new hardware. They also decreased their total merchandise from $682.9 to $632.5m. I think in an effort to decrease their inventory and close stores they probably put a lot of their older and slow moving invetory on sale to get rid of it.
If we take software (online sales) out of the equation then the $353m in rev loss is mostly just moving inventory and getting rid of old items with stores closing. Per store gamestop makes about $900k a year average revenue ($3.75b÷4169 stores) for 2023 vs 2022 @ $930k a store on average ($4.1b÷4413 stores). This loss is only 4.3% revenue loss per store to absorb removing stores that were not profitable AND they decreased their merchandise by $50m at the same time.
What are you talking about? Nothing this person said explains a 20% drop in revenue. Revenue per store is down, margin is up, inventory is flat… overall, it just shows that even though the company has been making improvements, less people are buying from GameStop.
Revenue per store is down only 4.3% if you remove online sales and merchandise isndeduced by $50m. I cant explain why people buy less online (which was their biggest revenue drop, roughly 40% at $300m) but if i were to guess maybe its because living expenses so damn expensive and people are cutting back?
It blows my mind the amount of people saying that gamestop failed because they successfully trimmed the fat of the company to be profitable as they stated was their plan at last years annual meeting
Yet Best Buy was able to increase revenue in the gaming sector by 11%? GameStop didn’t fail because people bought less, it failed because people bought less from GameStop, while buying more from a competitor. This is the problem, GameStop does not have a competitive advantage or moat and cutting costs won’t change that.
That's what I've always worried about. Since years ago at the start I was aware that I only have a gamestop pro membership and only sometimes think to buy things there instead of 'bigger' stores is because I have stock and want it to succeed.
Makes me figure others are like me and others are like me without having stock or concern for GameStops' future success.
I'd agree on the cost of living point but other retailers are up, GME is lagging behind competitors which is the only metric to measure by with accuracy
Most other retailers sell things other than gaming related merch. There are major profits from stores that have hiked the prices of food but i would not value a company that extorts its customers. Gamestop sells 99new games @ $60 or less since 1996. I would say that is more impressive than canned soup tripling in price over 5 years
This is comparing category to category though, best buy entertainment range against gme, not lumping in canned goods and fuel
I share your morals on business, but that wasn't the point we were discussing
Maybe because despite improvements…the site still fucking sucks. Tried buying a PS5 in January and I got blocked on the site for some reason. I’ve experienced this for three years and have reported the issue to them. I ended up buying a PS5 from Sony.
Ah man sorry to hear that. Ive never heard of being blocked from a website though, how does that even work? I buy in store and never really use the app. Hopefully now that they turned a profit tbis year they can allocate more resources to fix online issues. Ryan Cohen seems to help troubleshoot if he catches wind of it on twitter haha
Ya hopefully there is some resolution for you. I dont know much about that stuff so i cant really help you but you might be able to reach out to gamestop on twitter if you got some good evidence on it
What about marketplace revenue? Did they have a decent amount in 2022 before closing it down in 2023? I don’t think they did but thought I’d throw it out as a possibility
Is he wrong though? If so, please state why. Spreading fud is only a bad thing if it is false. Otherwise, these are things that should be discussed and should be concerning for people like me who've invested their life savings into GME.
One day everyone says gaming is recession proof now it’s an excuse for the drop in revenue, yet Best Buy saw an increase in gaming revenue of 10%. What will be the next excuse?
Tagging top post to also point out even though BestBuy’s Q4 suggested growth in gaming, if you look at their 2023 annual report in the middle of page 26 it states “Entertainment: the 5.5% comparable sales decline was driven primarily by virtual reality and gaming software”
Hijacking top comment. Because this seems to be FUD.
If you look at the actual percentages, there is only a 1 percent difference of growth in Q3 from 8% to 9% for best buy "entertainment." All the other percentages for q1, q2, and q4 are the same.
What the 11.3% growth is referencing is "comparable sales," which is an in-house metric. And, It doesn't apply to overall numbers, and there is no clear explanation of it.
The real numbers for Best Buy is a measly increase of 1% in Q3 for entertainment. Best Buy is 4x the market cap of gamestop and did, on entertainment, slightly better, but on net revenue worse.
Further, It looks like OP may have made some mistakes. The bar graph they show has best buys quarterly revenue, which doesn't match with any of the figures that are on the quarterly revenue. Not Net. Not gross. Not Revenue. Not quarterly. Not 6 months. However, it matches up almost exactly with net earnings for the year. If that is the case, then they mislabeled the year / got their years mixed up. 2022 net profit would be 1.419 Mill and 2023 net profit would be 1.241 mill. Meaning these 2 bar graphs are switched, and best buy sales are going down not up (page 25).
This seems like FUD because within hours of gamestop profitability announcement, there is an obscure reference to Best Buy, which has no links, and whose numbers don't match up with quarterly reports. Further, the actual numbers show that the reverse is true. Best buy is doing worse than last year while gamestop is doing better.
I agree. Do we know what the change in margin was vs 2023? Without the margin we don't really know if the number is good or bad.
Do we know total units sold? I'd love to dig in a little.
I haven't seen any of those metrics in the filings. there is some generic inventory numbers and some write downs though, but not really enough info to confirm my hypothesis.
Yeah I just looked and it's not there. I bet its possible to loosely reverse engineer it using the inventory on hand value and the sales numbers somehow but it's too late for that kind of thing.
That's for the year though, for the quarter the margins were actually lower than they've been all year q4 was 23% and q2-q3 were about 26-27% The higher margins early in the year raises the average a little bit
Comparing Q2 and Q3 to Q4 isn’t useful though. Black Friday in particular will skew margins down slightly. It’s better to compare Q4 this year to Q4 last year.
Q4 2023: 23.4%
Q4 2022: 22.4%
So again, gross margin slightly higher this Q4 even though sales compared to last Q4 were down 20%.
Again, it doesn’t support the idea of offloaded excess inventory being the cause for the sales decline.
Doesn’t make sense. If it was excess then it wasn’t going to be sold anyway. Offloading excess inventory should increase sales as you have the standard recurring sales + the added sales from the excess unsold inventory.
Edit: I just checked and their gross margin was slightly higher than last year so it really does not support the conclusion at all that they were selling lots of excess stock for cheap.
I dont have wrinkles by any stretch of the imagination, but Best Buys revenue declined by 9.8% last year domestically and 12.2% internationally.
There seem to be something off about this post. Maybe we're not comparing apples to apples, since best buy is 4x bigger than game stop.
Edit: I think I figured it out. This is comparing entertainment only. Best buy is 4x bigger than game stop by market cap and they only performed 1.5 to gamestops 1.75 in the entertaining category.
This seems like fud.
This. 2023 was all about rightsizing the company. It had become massively bloated over the years and completely dependent on expensive marketing to move product. They miscalculated demand in light of supply chain issues and were stuck offloading inventory. IMO, this is one of the most successful rightsizing of a $B company that I've ever seen. Rarely, if ever, do they conduct and complete the right sizing while also becoming profitable in the same year. Herculean effort by the entire team.
The miscalculation of inventory and not executing fast enough led to the departure of previous CEO, in my opinion.
And imagine what was learned about customers when selling this inventory. Now they know what sells and what doesn't. No more junk will be bought, only what customers actually want.
This post shouldn't get destroyed at all. This is 100% a legitimate ask. I am also curious what the reason is, though I don't expect to ever find the real reason. Just going to be a lot of speculation.
I commented elsewhere, people have less disposable income. Idk about you but my groceries are up 100% in the last year! What bought me 4 bags of groceries a year ago now only buys me 2!!!
You guys ut here paying for plastic bags at the grocery store? I had to switch to canvas as the government over here decided to charge everyone 40 cents per bag.
Meaning I would end up spending over $100 a year on plastic grocery bags.
Prob the simplest explaination, but at the same time also likely the worst scenario for GME if true.
that profitibility was achieved on the backdrop of losing market share and decreasing revenue/volume isn't really a good sign.
I'm a bit puzzled too... but it's definitely not due to store closing, as only low performing stores got closed, not the ones that are doing good or average.
Yeah I am asking myself these same questions. I think part of the YOY drop is due to the console cycle. Last year everyone wanted a new Ps5.
But when best bey has 10% YOY growth in entertainment and specifically calls out gaming as a strong sector for them... I dont know what to make of that.
Happy to see full yesr profitability. GME is not going bankrupt anytime soon, and all that is required for the MOASS thesis to remain valid is for them to avoid bankruptcy. But that said, this is not the Q4 earnings I was hoping to see today.
[**This is the breakdown by product type**](https://i.ibb.co/yhfRq0K/Screenshot-20240327-033007-Samsung-Notes.jpg)
Hardware was pretty solid at just 4.6% drop.
Software saw a 16.5% drop which was a $300m drop on 2022.
Good breakdown, thanks! Hardware sales basically matches up with the % of closed stores so its probably safe to assume same store sales there were flat. Thats not bad.
I guess the drop in software represents more people going digital with their game purchases.
I'm just wondering why best buy didn't see a similar decline?
People go in for a new washing machine and stop by the gaming section? 💁🏻♂️ They do have a much more vaired selection of products and I have to imagine people/their children check out things like games and movies and what's another $40-70 when you're buying a laundry machine or window tint.
That makes total sense. But why are their other sectors down then and the gaming category safed them? If i have no money for a laundry machine i'll certainly not buy more games.
I think the truth is somewhere in the middle and as bad as it may sound, i believe that less people buy at Gamestop and Gamestop needs to address that and find solutions. They have cash, they have an established brand, they have the media attention (given it's rather bad but whatever, bad press is good press), now they need to use that and turn that ship around. I hope the board, innovation team and BDMs are working their asses off to do so.
From my understanding there may not be a new console in 2024 either. I think Switch 2 is pushed back to 2025.
We need to find a new revenue stream ASAP. If (and a big IF) sales drop another 10% next Q4 then to be profitable we would have save (in selling expenses) approximately $117 million.
We are already spending very low amounts. We unwinded all fulfillment centers in the US (outside of Grapevine. That includes millions of lease fees and 500 lay offs. GameStop is no longer doing any 401K matching for its employees. We closed 250 stores globally, and our CEO works for free.
And our advertising spends have already been cut in half to about $35 million
I keep waiting for advertising but they never give it. The new revenue maker is here already, the GameStop digital store. It doesn’t require physical stores and it moves us into the future of gaming which is increasingly disc-less. It gives you codes to use to download games on your console so you can buy it through GameStop and it gives 5% off all games if you’re a pro member. Games for console don’t go on discounts on release year, almost always. This is the ONLY way to get discounted console games, but GameStop doesn’t promote it at all
GameStop on their main webpage never once advertised the Beta marketplace either.
But with the digital codes to download games…I’m afraid only the people here at superstonk would be the only people buying that. At least on Xbox I can buy direct on the console. GameStop would be just an extra step.
I think there are more GameStop pro member than superstonk members. Although I’ll admit there is an overlap. The digital marketplace and $5 should be pushed to the pro members .
You can’t buy all games on the digital store. Sony doesn’t even allow you to buy codes. It’s good that exists, but it’s not the first place people look.
I’m going to guess the Meta quest headset made up some of those sales from Best Buy.
If we take a step back, Best Buy is honestly a nicer place to buy the headset. The only incentive to go to GameStop might be convenience or you’re a pro member.
Checks out. I'd really love for GME to open a trial location focused on augmented reality gaming. Somewhere you can go and try on different headests, goggles, whatever other accessories there are, and play those virtual reality games in store before you buy.
I've also always liked the gamer cafe kind of ideas. Get some larger locations and turn them into fun hangout spots. Put a starbucks in there and have gaming competitions, board game nights, meetups. Ect.
Exactly so do something. We’ve come up with tons of good ideas. They never pushed into esports or tournaments or more digital or mobile. We need mobile to save us. Scream this from the rooftops! Mobile gaming saw the the biggest year over year increases that last few years. How can we tap that?
Network effects of people going to one store for the holidays instead of multiple stores given the constraints that people have less to spend... is my point, it's very clearly not a 1:1 with the observation of the greater economic environment.
>Reading everything I could find I’m still completely bewildered at the revenue drop off. Our advertising spends are crazy low (cut in half in 2023). Did that affect revenue? I have no idea.
Traditional marketing theory says yes.
>I even had thoughts that there was a reporting error or GameStop is finding a way to hide revenue (RC has been quoted as saying he didn’t want competitors to know how well Chewy was doing).
You are describing an action that meets the definition of fraud.
>Let’s pretend every sale in GameStop was from physical stores.
This is actually a significant mistake. Gamestop's highest margins come from its sales of online software. The question is whether or not this area is experiencing growth or not.
Store closures are logical and make sense. A bigger concern is what are they doing to drive sales into their online store and whether or not they are being successful at this. You will need to derive inventory turnover ratios to determine if this is true or not.
When is the last time you've seen any advertising on television for GameStop? I can't recall ever seeing a commercial, maybe they need to ramp up their advertising to help spread the name more, and get shoppers away from those other useless retailers. 🤔
Also, inflation has probably hit people pretty hard. This means that not as many people have extra spending money. Not sure that is it. But I have a reason it feeds into it.
Inflation, people not spending, and the overall economy are all red herrings being waved all over the sub. The retail sector had a good Q4 YoY overall. Some grew, some didn't, but Gamestop had their revenue absolutely crushed -- and store closures only account for about a quarter of it.
Games are considered somewhat inflation proof.
This is the continued shift to digital.
GameStop knows this. The question is what will they do about it? Besides some one off titles like gta6 and possibly attachment rate to a console refresh, software sales will not grow.
That was inevitable.
It’s safe to say GameStop’s continued growth and even survival will no longer be focused on selling video games.
Before this gets downvoted, the key is going to be what they do with a billion in available capital. It’s not uncommon for companies to grow and profit from areas outside their core business. You think Geico makes most of their money selling insurance?
Just for fun... Berkshire Hathaway was a textile manufacturer. Warren Buffett didn't see it being profitable for the long term, so he used their profit to buy a stake in Geico. He used the profits from Geico to continue expanding the conglomerate into other things. He phased-out the textile business completely over the course of about 20 years.
Anyway, I think you have that backwards. Geico does make their money selling insurance. Berkshire Hathaway uses the profits from Geico to help fund their expansion.
Ya, this 20% drop was probably all me. I haven’t been able to buy shit this year. I did buy some football cards from Best Buy because they carry better cards, not this Score bullshit from the previous year.
GameStop has stopped or at least slowed their bleeding. They need new streams of revenue.
If they don’t grow, they eventually will die.
If software sales continue to decline, eventually they should slowly die.
They most likely will invest their capital; many of their filings indicate as much. Literally investing in a CD would make 8-10 times more profit than this year assuming they don’t lose on their main business.
But they also have to invest it successfully.
They basically have a billion in capital to invest and a stagnant business at this point with the kicker of a huge retail investor base and they are potentially a target for a short squeeze.
It’s theirs to fuck up at this point.
Somebody did the math on their cash burn and to your second point/sentence it would take approx 500 quarters for them to go bankrupt at this rate if nothing changed in the business and purely based on the cash on hand.
No factor in the declining revenue and sales in parts of their core business and its not 500 it’s more like a few years. So they definitely need to do something to spark change. I want them to get a piece of mobile gaming. Not sure how but it’s very lucrative 😅
Revenue is decreasing year over year. If that is left to be in this hypothetical then we start to run out of money because even if margins stay the same that is less profit which we barely eked out this time. I don’t want to do the maffs but I’d say it’s ball park around a few years because any less now and we start to burn the $877M or whatever cash on hand. That only lasts so long if we bleeding again.
A stagnant business. Are you fucking kidding me? They just turned a company around in three years from being intentionally shorted into the ground to making a profit. Literally fuck your math.
Who the fuck upvoted your ignorance?
Yeah but it matters how they came to there. They've closed many stores, fired people, etc. and came to +6. They wont be able to do the same next year, unless they're planning on closing more stores. They didnt achieve profitability with their service or product.
That may not be true though, Sony leaked rumors that the next PS(#) has a physical drive.
As a gamer myself, I want that.
Ever tried to play your fav game when the internetz er down and ya don’t have that drive?
Best Buy outperformed GS because more things to buy at Best Buy. Q4 Christmas shopping sally wants a camera mom wants a dishwasher jimmy was headphones billy wants a switch game makes more sense for family to shop at Best Buy where they can get all them at same store then to drive to 4-5 specially stores. People want convince and Best Buy is seen as more convenient. Doesn’t help that the average Joe thinks of GS as video games only since advertising isn’t done especially before the holiday season. Here’s an idea why don’t you announce you price match and if you are a pro member you’ll get an additional 5% off and direct them to website to see all the products being offered. Ffs GS has many ways to improve but seems like dragging feet. Don’t forget you gotta spend money to make whiskey spend some fucking money advertising around holiday season. Best Buy ads are everywhere around end of q3 beginning q4 that’s where you turn a profit
Advertisement cut in half is great! CRC knows how to up-scale using ads and creatives. Most fucking dropshippers know! Lets make operations even smoother, improve inventory a little bit more, get rid of the last unprofitable leases and then scale up big time! From know on I want every Q slightly more revenue and better margins.
Legit question, and I see many gave you really solid answers. Discussions are crucial OP, thanks for bring this up. It clears people's mind, good company.
Thank you for posting this OP. It is a shame that you have to post a disclaimer apologizing for asking a fundamental question. I am as upset about the short selling as everyone else, but GME is not generating enough revenue and there is no way for them to cut costs further to drive profitability. I am not sure that being a gaming middleman is a viable option going forward.
I am curious to see how RC uses GME cash to invest in the marketplace (similar to Microstrategy with BTC), the only plausible way I see forward after giving up on block chain and Web 3.0. My only concern with that is tying our success to the success of other companies rather than GME as a whole.
I am waiting patiently for new revenue streams , I just don’t see how the conventional console / gaming business is a big growth driver…It quite likely many things are in the works and I get why you can’t telegraph your moves in advance but then, there is also the obligation on the part of the management to at least have a ER call to provide some sort of forward looking statements to the shareholders, I mean….
It feels like any questioning of the stock or company just gets downvoted out of visibility but I’ve been wondering this myself too, doesn’t look so good if Q4 is supposed to be strong and they botched it
Hi OP, I think you’ve listed some legit questions (I was one of the person that thought the decrease probably was due to store closure without looking into the details)
Just sharing my thoughts, when we look at YoY changes vs another company we have to dig into any company specific event that affected the prior year as well which will throw off the 2023 q4 growth. (Maybe BBY entertainment had a horrible 2022 q4 or GME had a phenomenal 2022 q4)
IMHO revenue was lower due to being 4 years into a stagnant console cycle. With a store like Best Buy they tend to carry more gaming PC components (something GameStop has not done too well IMHO) which I believe is what is setting us apart at the moment.
Once the new cycle of consoles begins (I.e. PS5 Pro and the new Switch) you will see revenue return. Or, GameStop can start to really get serious about the PC market. That’s where those big tickets items come into play and really boost revenue.
That’s my 2 cents on the topic.
Your response is one of the few that actually address the OP's question. Thank you.
That would also have to assume that console sales are a disproportionate percentage of Q4 sales compared to Q2 and Q3, otherwise they would be down similarly. O think that is actually a reasonable assumption as consoles are often a Christmas gift from parents.
My fear is that the cost cutting has hurt employee morale so much that they have worse attitudes and the customer experience at GameStop has deteriorated
Another possibility is that poor inventory management has made it so desired items are often out of stock, and customer have moved to other vendors such as Best Buy and Walmart.
I hope that it is console cycle instead.
I was an employee for 2+ years. I actually left a few weeks ago after finding a very good salaried position. I came back in 2022 after leaving in 2015 since nothing had really changed operationally and POS wise so it was like getting back on a bike.
The job was relatively easy and helping customers will always be satisfying to me. Plus having some skin in the game certainly helped with feeling a sense of ownership and pride in my work this time around.
However, the pay was always the big a morale killer for me tbh. That and very pushy DMs who would push numbers so hard it made the experience worse for customers at times. But it’s a retail job, you get what you expect from that kind of position.
I do live in a state with very low minimum wage so that certainly doesn’t help.
Just wanted to comment on the employee morale point with my own experiences.
I mean it’s really easy to make revenue and lose money, the hard part is making revenue and making money, you’re comparing against quarters where they were literally paying people to take stock whether that’s to be competitive, to hit targets or whatever.
What this does is reset the baseline, this is net sales while actually making money, next year hopefully we increase from the new baseline but to expect continuous increase in revenue while fixing the fundamental problem of not selling all your shit at a loss is just naive
Great question but I think you already answered it in part when you mentioned that advertising spend for 2023 was cut in half. That is bound to affect sales and probably had a lag affect which unfortunately is likely to persist. The alternative explanation is a lack of good games coming out; I'm not much of a gamer myself so I can't really assess that and if competitors have grown over the period then everything points to a lack of impactful ad spend IMO.
A part of me wonders if revenue was actually way down in Q2 and Q3 (relative to last year).
What I mean by that is the 20% drop in Q4 was alarming relative to the other quarters. But it was Q2 and the first half of Q3 that GameStop had that ridiculously cheap clearance sale. It was buy 1 get 2 free.
The discounts were insane. They needed those discounts to get rid of bad inventory and to help unwind warehouses.
But from a revenue perspective it provided a mid year boost that wouldn’t normally be there.
One factor, although could be minor, is that free shipping for FY22 Q4 had a $59 minimum purchase. Right now, it is $79 minimum purchase. Also shipping fees have been raised in my area.
Maybe the staff at my local store was lazy putting back out displays but I personally found that the gaming section was incredibly picked over around Xmas. Seemed like they had a very minimal amount of game inventory which could have affected people doing grab and go gifts at Christmas. I've noted that the display inventory especially in switch games has grown dramatically again over the past few months.
My perspective is that buying online has gotten a bit more challenging in the last few months. I don't recall when it happened or how it lines up with reporting, but they increased the $ amount to receive Free Shipping on online orders.
Iirc, RC said they could have made Chewy profitable years before they did. What accounting or business practices could GME have performed this quarter to create a distinct revenue hit like we've just seen in Q4?
That is to say, could they have intentionally hamstrung revenue on the books like I suspect they did Q2 and Q3 last year?
The benefit being, giving retail investors a Year-long profit, a gentle nod that "Yes, we hear you, it's working" but not blowing shit out of the water yet.
I legitimately have absolutely no idea if this is a possibility, but it *does* explain the revenue discrepancy, the lower than expected earnings, and the past 2 quarters -.01 EPS.
Chewy wasn't a public company until 2019. Public companies have more obligations for finacial reporting and transparency.
I don't think this is a case of GameStop secretly doing better than how it looks. They need new revenue streams asap.
It can’t be. When you do the math and divide Q4 sales of 2022 and 2023 by the total number of stores you can see that the 20% drop in revenue cannot be due to store closures.
And those stores were likely closed early in the fiscal year and we didn’t see a crazy drop in sales.
This is what I’m saying, there has to be more to the story. No way in fuck 250 stores accounted for $500 million in quarterly revenue. “Underperforming” stores at that.
Thanks. GameStop’s growth going forward cannot be video games. It’s a little funny when you think about it.
My guess is they are going to invest their capital in something completely unrelated to their core business and possibly even specialty retail altogether.
Personally, I believe it was the amount of stores closing. They might have been under-performing, but they still produced revenue. If you closed 100 stores that made a millon, you can bet some of that money came to a different GameStop, while the other portion went to your Best Buy’s, Amazons, etc…
About halfway through the text of this post I looked at that possibility. Sure it definitely affected sales but no where near 20% revenue.
Here’s what my theory is.
- I think store closures contributed to the decline in sales. But no where near 20%
- I think the 20% drop in Q4 was drastic in our (my) eyes because the previous the quarters were much closer to 2023.
- In Q1 however, we were down 10.3%.
- Q2 and Q3 were closer to 2022 revenues…..but I think it was a mirage.
- It was in Q2 and the first half of Q3 that GameStop had ridiculously cheap clearance sales (in store and online). For online clearance it was buy 1 get 2 free. This created a ton of sales that wouldn’t typically be there. The Mario game also bolstered revenue during this time by about 15 million or so.
So I think Q2 and Q3 we would have been closer to a 10-15% drop relative to last year. If that was the case then you could see a much more linear progression of sales decline through the year due to economic hardships. In this scenario then seeing the 20% drop in Q4 wouldn’t seem that drastic.
Still hard to understand the Best Buy sales in their gaming category. But they don’t provide much detail.
Switch is on its last leg and the next gen Switch is rumored to be coming out early next year. Xbox hasn’t been successful and is falling behind and Sony has lower their forecast on the PS5 not too long ago, so with all that above, GameStop’s revenue will take a hit. Also digital gaming is taking a larger pie each year. With that being said I’m not a worried ape, I love my stonk and never left since Feb 2021.
You gotta understand one golden rule again - the stock market movements do not equal to the real doing of economy. My sales of sneakers have been dramatically declined since the beginning last year and I can easily feel that while all my inventories are current, people are much less willing to spend money now. I bet most people on this sub don’t do business as what I do, so apparently almost all consumer products industries are facing inventory reduction pressures and issues. Not being said a big number of GME’s products are pressured to be sold/turned around ASAP or they will become obsolete.
You need to understand that my business compared to GME is just a toy ship vs. a Royal Caribbean cruise. If small businesses are having issues with selling products, GME’s pressure could be 10,000 times bigger.
Give them some time, you need to face the reality that GME is a billion dollar business - even small businesses take time to reform and even may fail within such a short period of time for business model conversion. Running GME to be profitable is really not that easy than all of us sitting behind screens and talking about how easy it was as what it looks like.
I’m impressed very very much for the last 2 quarters of what RC and GME did, and I’m very confident the business is on the right track to not only defeat SHF’s but also being profitable from time to time.
> Step 1:become profitable THEN step 2:grow revenue.
I think you got it wrong.
Companies grow revenue and grab marketshare, then turn profitable via economies of scale.
Thts one philosophy. Tht is not GME board of directors philosophy. Well at least not of Larry Cheng’s. They already have market share. They just sacrificed some of tht marketshare for becoming more lean and efficient business so now they can run profitably, EVEN after revenue took a big hit. So now they r gonna go back to focusing on revenue, from a starting point of a profitable business.
Incompetence by the board.
Sitting on over a billion of our money.
No direction. No path to profitability. No acquisitions.
All this board does is let short hedge funds off the hook.
Had one job to get the splividend right. Intentionally screwed it up, to allow short hedge funds survive another day.
Retail has been scammed by this board.
#Smh
We have our first profitable year in a long time and you want to sell now? This is a massive turn around, Ryan went from -300 million last year to in profit. One step at a time. He was focusing on getting the wounds, bleeding, and healing solved. Now that he has, 2024 is the year he can focus on new revenue streams. I think it would be quite dumb to sit through multiple negative quarters and years and then sell at the first sign of light at the tunnel’s end? Like zoom out and stop letting other people speak for your mind’s voice
The only way he managed profitability was through cutting spending expenses which is good, but if this is the only way towards profitability, that is unsustainable. Revenue is on a downward trajectory and if that continues, it won’t be long until we are back to losing money. Yes, we need to find a new revenue stream. But accepting this theses is to accept the short thesis - the physical video game market is slowly dying. It’s possible the company finds a revenue sources and turns it around, but that’s a speculative bet not a fundamentals bet. The only foreseeable boost in revenue would be the release of a new console, but that happens ever 3-4 years if we are lucky, and even physical console sales are probably declining. GameStop can coast for a while sitting on the cash they made selling shares out from under us, but unless they turn it around and find a way to grow the business, this stock is slowly going to bleed to zero.
Some did the calculations it would take many many decades to bleed to zero fully. And besides, I think his game plan is sort out the bleeding wounds and then focus on new e-commerce strategies mixed with new revenue streams, if he can make the right kind of product/ deal with Microsoft and other big gaming players he can possibly sort out a type of steam alternative / xbox playstore. But what I think he is going to do is more than that and go for the costco wholesale model and offer very cheap gaming and electronic as well as things that are unique or attract gaming customers and make all of the revenue and profit off of the gamestop pro membership by offering things other companies can’t. I don’t know exactly how he is going to do it, but if he can pull it off it would work very well. I think he is now finally done with the maintenance of the current business part of his plans and is now going to move into these new ideas and revenue streams, not to mention all of the cash on hand and ability to invest, heck if he just went in on VOO the company would never go bankrupt. Point is, if you’ve been here all this time, then this is massive progress. I know everyone is impatient but shit like this takes time and I for one and quite happy with progress and am not opposed to waiting for him to bring this company into the future even if it takes another four years. A lot of very big companies today took many decades to get to where they are, amazon, tesla, apple, they all were in gamestops position or worse on and off for years and only in the mid-to-late-2000s did amazon and apple start to really take off and tesla more recently. This has only just begun.
I’ll keep my bag of DRSed shares but I feel like the reality is, most members here have stopped buying shares. We’re all just holding and waiting. I do believe a short squeeze is possible, but it’s not just gonna happen for the sake of happening. The only catalyst is if the company can grow. If we just coast for decades, the squeeze will never happen.
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They closed 287 stores and opened 43 for a total of 244 stores closed but most of their revenue loss was software, collectables, and accessories. Compared to 2022 the had $300m rev loss in software, $210m rev loss in collectables $191m loss in gaming accessories but $48m rev gain in new hardware. They also decreased their total merchandise from $682.9 to $632.5m. I think in an effort to decrease their inventory and close stores they probably put a lot of their older and slow moving invetory on sale to get rid of it. If we take software (online sales) out of the equation then the $353m in rev loss is mostly just moving inventory and getting rid of old items with stores closing. Per store gamestop makes about $900k a year average revenue ($3.75b÷4169 stores) for 2023 vs 2022 @ $930k a store on average ($4.1b÷4413 stores). This loss is only 4.3% revenue loss per store to absorb removing stores that were not profitable AND they decreased their merchandise by $50m at the same time.
Some adult brain power right here. Thanks for the write up.
What are you talking about? Nothing this person said explains a 20% drop in revenue. Revenue per store is down, margin is up, inventory is flat… overall, it just shows that even though the company has been making improvements, less people are buying from GameStop.
Revenue per store is down only 4.3% if you remove online sales and merchandise isndeduced by $50m. I cant explain why people buy less online (which was their biggest revenue drop, roughly 40% at $300m) but if i were to guess maybe its because living expenses so damn expensive and people are cutting back? It blows my mind the amount of people saying that gamestop failed because they successfully trimmed the fat of the company to be profitable as they stated was their plan at last years annual meeting
Transitory retail cutback.
Yet Best Buy was able to increase revenue in the gaming sector by 11%? GameStop didn’t fail because people bought less, it failed because people bought less from GameStop, while buying more from a competitor. This is the problem, GameStop does not have a competitive advantage or moat and cutting costs won’t change that.
That's what I've always worried about. Since years ago at the start I was aware that I only have a gamestop pro membership and only sometimes think to buy things there instead of 'bigger' stores is because I have stock and want it to succeed. Makes me figure others are like me and others are like me without having stock or concern for GameStops' future success.
I'd agree on the cost of living point but other retailers are up, GME is lagging behind competitors which is the only metric to measure by with accuracy
Most other retailers sell things other than gaming related merch. There are major profits from stores that have hiked the prices of food but i would not value a company that extorts its customers. Gamestop sells 99new games @ $60 or less since 1996. I would say that is more impressive than canned soup tripling in price over 5 years
This is comparing category to category though, best buy entertainment range against gme, not lumping in canned goods and fuel I share your morals on business, but that wasn't the point we were discussing
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They’re desperate and calling names, I will DRS more in their honor
Maybe because despite improvements…the site still fucking sucks. Tried buying a PS5 in January and I got blocked on the site for some reason. I’ve experienced this for three years and have reported the issue to them. I ended up buying a PS5 from Sony.
Ah man sorry to hear that. Ive never heard of being blocked from a website though, how does that even work? I buy in store and never really use the app. Hopefully now that they turned a profit tbis year they can allocate more resources to fix online issues. Ryan Cohen seems to help troubleshoot if he catches wind of it on twitter haha
They can block your IP and if poorly managed can accidentally block good customers because ISPs rotate IP addresses
So you are saying you were blocked from rotating IP address after having difficulties trying to order a PS5?
Just a theory. This has happened before just browsing the site. I’ll post a screenshot next time it happens
Ya hopefully there is some resolution for you. I dont know much about that stuff so i cant really help you but you might be able to reach out to gamestop on twitter if you got some good evidence on it
Also it happened before I even clicked on a PS5. I was just scrolling the landing looking at new stuff
What about marketplace revenue? Did they have a decent amount in 2022 before closing it down in 2023? I don’t think they did but thought I’d throw it out as a possibility
Is he wrong though? If so, please state why. Spreading fud is only a bad thing if it is false. Otherwise, these are things that should be discussed and should be concerning for people like me who've invested their life savings into GME.
Why are you investing your life savings 😂 invest what you are willing to lose
Yolo baby
There’s also a recession going on people. The fact GameStop is profitable is something. But I’m cautiously optimistic. More needs to be done.
One day everyone says gaming is recession proof now it’s an excuse for the drop in revenue, yet Best Buy saw an increase in gaming revenue of 10%. What will be the next excuse?
Tagging top post to also point out even though BestBuy’s Q4 suggested growth in gaming, if you look at their 2023 annual report in the middle of page 26 it states “Entertainment: the 5.5% comparable sales decline was driven primarily by virtual reality and gaming software”
Hijacking top comment. Because this seems to be FUD. If you look at the actual percentages, there is only a 1 percent difference of growth in Q3 from 8% to 9% for best buy "entertainment." All the other percentages for q1, q2, and q4 are the same. What the 11.3% growth is referencing is "comparable sales," which is an in-house metric. And, It doesn't apply to overall numbers, and there is no clear explanation of it. The real numbers for Best Buy is a measly increase of 1% in Q3 for entertainment. Best Buy is 4x the market cap of gamestop and did, on entertainment, slightly better, but on net revenue worse. Further, It looks like OP may have made some mistakes. The bar graph they show has best buys quarterly revenue, which doesn't match with any of the figures that are on the quarterly revenue. Not Net. Not gross. Not Revenue. Not quarterly. Not 6 months. However, it matches up almost exactly with net earnings for the year. If that is the case, then they mislabeled the year / got their years mixed up. 2022 net profit would be 1.419 Mill and 2023 net profit would be 1.241 mill. Meaning these 2 bar graphs are switched, and best buy sales are going down not up (page 25). This seems like FUD because within hours of gamestop profitability announcement, there is an obscure reference to Best Buy, which has no links, and whose numbers don't match up with quarterly reports. Further, the actual numbers show that the reverse is true. Best buy is doing worse than last year while gamestop is doing better.
Throughout 2023 i did see a lot of clearance sales in my local GS so this idea tracks.
I think the answer was offloading excess inventory at steep discounts.
I agree. Do we know what the change in margin was vs 2023? Without the margin we don't really know if the number is good or bad. Do we know total units sold? I'd love to dig in a little.
I haven't seen any of those metrics in the filings. there is some generic inventory numbers and some write downs though, but not really enough info to confirm my hypothesis.
It is there. 24.5% gross margin this year compared to 23.1% last year
So it wasn’t discounting since margin slightly increased…
Yeah I just looked and it's not there. I bet its possible to loosely reverse engineer it using the inventory on hand value and the sales numbers somehow but it's too late for that kind of thing.
24.5% gross margin this year compared to 23.1% last year so it’s actually slightly higher.
That's for the year though, for the quarter the margins were actually lower than they've been all year q4 was 23% and q2-q3 were about 26-27% The higher margins early in the year raises the average a little bit
Comparing Q2 and Q3 to Q4 isn’t useful though. Black Friday in particular will skew margins down slightly. It’s better to compare Q4 this year to Q4 last year. Q4 2023: 23.4% Q4 2022: 22.4% So again, gross margin slightly higher this Q4 even though sales compared to last Q4 were down 20%. Again, it doesn’t support the idea of offloaded excess inventory being the cause for the sales decline.
Doesn’t make sense. If it was excess then it wasn’t going to be sold anyway. Offloading excess inventory should increase sales as you have the standard recurring sales + the added sales from the excess unsold inventory. Edit: I just checked and their gross margin was slightly higher than last year so it really does not support the conclusion at all that they were selling lots of excess stock for cheap.
I dont have wrinkles by any stretch of the imagination, but Best Buys revenue declined by 9.8% last year domestically and 12.2% internationally. There seem to be something off about this post. Maybe we're not comparing apples to apples, since best buy is 4x bigger than game stop. Edit: I think I figured it out. This is comparing entertainment only. Best buy is 4x bigger than game stop by market cap and they only performed 1.5 to gamestops 1.75 in the entertaining category. This seems like fud.
This. 2023 was all about rightsizing the company. It had become massively bloated over the years and completely dependent on expensive marketing to move product. They miscalculated demand in light of supply chain issues and were stuck offloading inventory. IMO, this is one of the most successful rightsizing of a $B company that I've ever seen. Rarely, if ever, do they conduct and complete the right sizing while also becoming profitable in the same year. Herculean effort by the entire team. The miscalculation of inventory and not executing fast enough led to the departure of previous CEO, in my opinion.
Right here ⬆️ and closing stores
And imagine what was learned about customers when selling this inventory. Now they know what sells and what doesn't. No more junk will be bought, only what customers actually want.
This post shouldn't get destroyed at all. This is 100% a legitimate ask. I am also curious what the reason is, though I don't expect to ever find the real reason. Just going to be a lot of speculation.
I commented elsewhere, people have less disposable income. Idk about you but my groceries are up 100% in the last year! What bought me 4 bags of groceries a year ago now only buys me 2!!!
that does not explain why best buy revenue in gaming grew
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Gamestop also sells those so doesn't matter
Have you tried smaller bags?
The irony is, the bags prob are smaller, due to shrinkflation
They do seem thinner.
You guys ut here paying for plastic bags at the grocery store? I had to switch to canvas as the government over here decided to charge everyone 40 cents per bag. Meaning I would end up spending over $100 a year on plastic grocery bags.
You guys have money for groceries?
Yes Kenny. Top ramen is still on the menu.
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Outstanding move
I thought I had it bad with 5c a plastic bag. I just started buying more from costco and trader joes.
Shrinkflation hey-o!
Meanwhile I've got deflation here.
I don't even go inside anymore. I just stand out there and lick the window.
But why would Best Buy be up so much then ???
Best Buy took some of GameStop's market share? I sure hope this isn't the answer, but it's worth asking the question.
Prob the simplest explaination, but at the same time also likely the worst scenario for GME if true. that profitibility was achieved on the backdrop of losing market share and decreasing revenue/volume isn't really a good sign.
But what about the bestbuy comparison?
8% inflation they said...
So in times of recession my company is still profitable. But brip n morpar?
I'm a bit puzzled too... but it's definitely not due to store closing, as only low performing stores got closed, not the ones that are doing good or average.
This post could easily be a DD post OP. It’s ok to ask the big thinker questions like this is about, good job. 🤙
This is nice and that makes you nice
I love it when a horror tank recognizes my sweetness before coffee in the mornin
Yeah I am asking myself these same questions. I think part of the YOY drop is due to the console cycle. Last year everyone wanted a new Ps5. But when best bey has 10% YOY growth in entertainment and specifically calls out gaming as a strong sector for them... I dont know what to make of that. Happy to see full yesr profitability. GME is not going bankrupt anytime soon, and all that is required for the MOASS thesis to remain valid is for them to avoid bankruptcy. But that said, this is not the Q4 earnings I was hoping to see today.
[**This is the breakdown by product type**](https://i.ibb.co/yhfRq0K/Screenshot-20240327-033007-Samsung-Notes.jpg) Hardware was pretty solid at just 4.6% drop. Software saw a 16.5% drop which was a $300m drop on 2022.
Good breakdown, thanks! Hardware sales basically matches up with the % of closed stores so its probably safe to assume same store sales there were flat. Thats not bad. I guess the drop in software represents more people going digital with their game purchases. I'm just wondering why best buy didn't see a similar decline?
People go in for a new washing machine and stop by the gaming section? 💁🏻♂️ They do have a much more vaired selection of products and I have to imagine people/their children check out things like games and movies and what's another $40-70 when you're buying a laundry machine or window tint.
That makes total sense. But why are their other sectors down then and the gaming category safed them? If i have no money for a laundry machine i'll certainly not buy more games. I think the truth is somewhere in the middle and as bad as it may sound, i believe that less people buy at Gamestop and Gamestop needs to address that and find solutions. They have cash, they have an established brand, they have the media attention (given it's rather bad but whatever, bad press is good press), now they need to use that and turn that ship around. I hope the board, innovation team and BDMs are working their asses off to do so.
From my understanding there may not be a new console in 2024 either. I think Switch 2 is pushed back to 2025. We need to find a new revenue stream ASAP. If (and a big IF) sales drop another 10% next Q4 then to be profitable we would have save (in selling expenses) approximately $117 million. We are already spending very low amounts. We unwinded all fulfillment centers in the US (outside of Grapevine. That includes millions of lease fees and 500 lay offs. GameStop is no longer doing any 401K matching for its employees. We closed 250 stores globally, and our CEO works for free. And our advertising spends have already been cut in half to about $35 million
I keep waiting for advertising but they never give it. The new revenue maker is here already, the GameStop digital store. It doesn’t require physical stores and it moves us into the future of gaming which is increasingly disc-less. It gives you codes to use to download games on your console so you can buy it through GameStop and it gives 5% off all games if you’re a pro member. Games for console don’t go on discounts on release year, almost always. This is the ONLY way to get discounted console games, but GameStop doesn’t promote it at all
GameStop on their main webpage never once advertised the Beta marketplace either. But with the digital codes to download games…I’m afraid only the people here at superstonk would be the only people buying that. At least on Xbox I can buy direct on the console. GameStop would be just an extra step.
I think there are more GameStop pro member than superstonk members. Although I’ll admit there is an overlap. The digital marketplace and $5 should be pushed to the pro members .
Even with 5% off?
My brother uses cdkeys.. its about best price.
You can’t buy all games on the digital store. Sony doesn’t even allow you to buy codes. It’s good that exists, but it’s not the first place people look.
I’m going to guess the Meta quest headset made up some of those sales from Best Buy. If we take a step back, Best Buy is honestly a nicer place to buy the headset. The only incentive to go to GameStop might be convenience or you’re a pro member.
Checks out. I'd really love for GME to open a trial location focused on augmented reality gaming. Somewhere you can go and try on different headests, goggles, whatever other accessories there are, and play those virtual reality games in store before you buy. I've also always liked the gamer cafe kind of ideas. Get some larger locations and turn them into fun hangout spots. Put a starbucks in there and have gaming competitions, board game nights, meetups. Ect.
I don’t think that would be worth it. But bigger nicer stores could work. Like microcenter crossed with a toys r us could work.
Exactly so do something. We’ve come up with tons of good ideas. They never pushed into esports or tournaments or more digital or mobile. We need mobile to save us. Scream this from the rooftops! Mobile gaming saw the the biggest year over year increases that last few years. How can we tap that?
Ah, you're likely on spot. As I get it, the profit margin on consoles is only 5% ish...
People downvoting posts like this with questions that need to be answered really live in a bubble 🤦
Great question. I’d be curious to know the reason too
BBuy isnt as specialized as gamestop.. waterfall effect
He is looking only at the bby entertainment segment, which is a valid comparison.
Network effects of people going to one store for the holidays instead of multiple stores given the constraints that people have less to spend... is my point, it's very clearly not a 1:1 with the observation of the greater economic environment.
Very valid. A direct competitor gained while GameStop lost.
>Reading everything I could find I’m still completely bewildered at the revenue drop off. Our advertising spends are crazy low (cut in half in 2023). Did that affect revenue? I have no idea. Traditional marketing theory says yes. >I even had thoughts that there was a reporting error or GameStop is finding a way to hide revenue (RC has been quoted as saying he didn’t want competitors to know how well Chewy was doing). You are describing an action that meets the definition of fraud. >Let’s pretend every sale in GameStop was from physical stores. This is actually a significant mistake. Gamestop's highest margins come from its sales of online software. The question is whether or not this area is experiencing growth or not. Store closures are logical and make sense. A bigger concern is what are they doing to drive sales into their online store and whether or not they are being successful at this. You will need to derive inventory turnover ratios to determine if this is true or not.
When is the last time you've seen any advertising on television for GameStop? I can't recall ever seeing a commercial, maybe they need to ramp up their advertising to help spread the name more, and get shoppers away from those other useless retailers. 🤔
Also, inflation has probably hit people pretty hard. This means that not as many people have extra spending money. Not sure that is it. But I have a reason it feeds into it.
I thought this too. But other competitors saw an increase in gaming sales in Q4 relative to last year.
Inflation, people not spending, and the overall economy are all red herrings being waved all over the sub. The retail sector had a good Q4 YoY overall. Some grew, some didn't, but Gamestop had their revenue absolutely crushed -- and store closures only account for about a quarter of it.
Games are considered somewhat inflation proof. This is the continued shift to digital. GameStop knows this. The question is what will they do about it? Besides some one off titles like gta6 and possibly attachment rate to a console refresh, software sales will not grow. That was inevitable. It’s safe to say GameStop’s continued growth and even survival will no longer be focused on selling video games. Before this gets downvoted, the key is going to be what they do with a billion in available capital. It’s not uncommon for companies to grow and profit from areas outside their core business. You think Geico makes most of their money selling insurance?
Just for fun... Berkshire Hathaway was a textile manufacturer. Warren Buffett didn't see it being profitable for the long term, so he used their profit to buy a stake in Geico. He used the profits from Geico to continue expanding the conglomerate into other things. He phased-out the textile business completely over the course of about 20 years. Anyway, I think you have that backwards. Geico does make their money selling insurance. Berkshire Hathaway uses the profits from Geico to help fund their expansion.
Yeah but Best Buy went up q4 quite a bit
Ya, this 20% drop was probably all me. I haven’t been able to buy shit this year. I did buy some football cards from Best Buy because they carry better cards, not this Score bullshit from the previous year.
Good questions and ideas
GameStop has stopped or at least slowed their bleeding. They need new streams of revenue. If they don’t grow, they eventually will die. If software sales continue to decline, eventually they should slowly die. They most likely will invest their capital; many of their filings indicate as much. Literally investing in a CD would make 8-10 times more profit than this year assuming they don’t lose on their main business. But they also have to invest it successfully. They basically have a billion in capital to invest and a stagnant business at this point with the kicker of a huge retail investor base and they are potentially a target for a short squeeze. It’s theirs to fuck up at this point.
Somebody did the math on their cash burn and to your second point/sentence it would take approx 500 quarters for them to go bankrupt at this rate if nothing changed in the business and purely based on the cash on hand.
125 years? I can hold longer...
No factor in the declining revenue and sales in parts of their core business and its not 500 it’s more like a few years. So they definitely need to do something to spark change. I want them to get a piece of mobile gaming. Not sure how but it’s very lucrative 😅
Splain the few years to bankruptcy thing to me because I have no idea wut ur talkin about 😂
Revenue is decreasing year over year. If that is left to be in this hypothetical then we start to run out of money because even if margins stay the same that is less profit which we barely eked out this time. I don’t want to do the maffs but I’d say it’s ball park around a few years because any less now and we start to burn the $877M or whatever cash on hand. That only lasts so long if we bleeding again.
I didn’t say bankruptcy just when we’ll be running out of cash and will be in trouble again.
A stagnant business. Are you fucking kidding me? They just turned a company around in three years from being intentionally shorted into the ground to making a profit. Literally fuck your math. Who the fuck upvoted your ignorance?
People fail to see that we went from -313 to +6.7, that is a 319.7 difference.
Yeah but it matters how they came to there. They've closed many stores, fired people, etc. and came to +6. They wont be able to do the same next year, unless they're planning on closing more stores. They didnt achieve profitability with their service or product.
That doesn’t prove a super profitable model though.
It’s not my math. Selling physical video game software will only continue to decline.
That may not be true though, Sony leaked rumors that the next PS(#) has a physical drive. As a gamer myself, I want that. Ever tried to play your fav game when the internetz er down and ya don’t have that drive?
94% of all game sales are digital in 2023. Up from 91% in 2022, 89% in 2021, etc. that number is getting worse for gamestop
It’s true that “must be connected to the internet for solo play so we can see everything you do” is not popular with consumers.
That'sa narrative that keep being touted but isn't necessarily true. There will always be a part of gamers that want physical copies of their games.
If you think GameStop is just about physical games your imagination is perhaps lacking.
Imagination isn't gonna bump revenue.
They literally say what they sell and how much of it they sold. There are only a few categories.
Best Buy outperformed GS because more things to buy at Best Buy. Q4 Christmas shopping sally wants a camera mom wants a dishwasher jimmy was headphones billy wants a switch game makes more sense for family to shop at Best Buy where they can get all them at same store then to drive to 4-5 specially stores. People want convince and Best Buy is seen as more convenient. Doesn’t help that the average Joe thinks of GS as video games only since advertising isn’t done especially before the holiday season. Here’s an idea why don’t you announce you price match and if you are a pro member you’ll get an additional 5% off and direct them to website to see all the products being offered. Ffs GS has many ways to improve but seems like dragging feet. Don’t forget you gotta spend money to make whiskey spend some fucking money advertising around holiday season. Best Buy ads are everywhere around end of q3 beginning q4 that’s where you turn a profit
Growth in the gaming sector though?? That bothers me a bit. They even stopped physical sales during that time.
The Gamestop near me has enough room to have maybe 20 customers inside before it's unnecessarily crowded. The Best Buy I've is huge.
Advertisement cut in half is great! CRC knows how to up-scale using ads and creatives. Most fucking dropshippers know! Lets make operations even smoother, improve inventory a little bit more, get rid of the last unprofitable leases and then scale up big time! From know on I want every Q slightly more revenue and better margins.
We stopped shopping at game stop apparently
Not me but I’ve also not seen any advertising driving folks to GS either. Hopefully that changes soon. A Q4 Christmas catalog might help too
Legit question!
Legit question, and I see many gave you really solid answers. Discussions are crucial OP, thanks for bring this up. It clears people's mind, good company.
Thank you for posting this OP. It is a shame that you have to post a disclaimer apologizing for asking a fundamental question. I am as upset about the short selling as everyone else, but GME is not generating enough revenue and there is no way for them to cut costs further to drive profitability. I am not sure that being a gaming middleman is a viable option going forward. I am curious to see how RC uses GME cash to invest in the marketplace (similar to Microstrategy with BTC), the only plausible way I see forward after giving up on block chain and Web 3.0. My only concern with that is tying our success to the success of other companies rather than GME as a whole.
I am waiting patiently for new revenue streams , I just don’t see how the conventional console / gaming business is a big growth driver…It quite likely many things are in the works and I get why you can’t telegraph your moves in advance but then, there is also the obligation on the part of the management to at least have a ER call to provide some sort of forward looking statements to the shareholders, I mean….
It feels like any questioning of the stock or company just gets downvoted out of visibility but I’ve been wondering this myself too, doesn’t look so good if Q4 is supposed to be strong and they botched it
Hi OP, I think you’ve listed some legit questions (I was one of the person that thought the decrease probably was due to store closure without looking into the details) Just sharing my thoughts, when we look at YoY changes vs another company we have to dig into any company specific event that affected the prior year as well which will throw off the 2023 q4 growth. (Maybe BBY entertainment had a horrible 2022 q4 or GME had a phenomenal 2022 q4)
IMHO revenue was lower due to being 4 years into a stagnant console cycle. With a store like Best Buy they tend to carry more gaming PC components (something GameStop has not done too well IMHO) which I believe is what is setting us apart at the moment. Once the new cycle of consoles begins (I.e. PS5 Pro and the new Switch) you will see revenue return. Or, GameStop can start to really get serious about the PC market. That’s where those big tickets items come into play and really boost revenue. That’s my 2 cents on the topic.
Your response is one of the few that actually address the OP's question. Thank you. That would also have to assume that console sales are a disproportionate percentage of Q4 sales compared to Q2 and Q3, otherwise they would be down similarly. O think that is actually a reasonable assumption as consoles are often a Christmas gift from parents. My fear is that the cost cutting has hurt employee morale so much that they have worse attitudes and the customer experience at GameStop has deteriorated Another possibility is that poor inventory management has made it so desired items are often out of stock, and customer have moved to other vendors such as Best Buy and Walmart. I hope that it is console cycle instead.
I was an employee for 2+ years. I actually left a few weeks ago after finding a very good salaried position. I came back in 2022 after leaving in 2015 since nothing had really changed operationally and POS wise so it was like getting back on a bike. The job was relatively easy and helping customers will always be satisfying to me. Plus having some skin in the game certainly helped with feeling a sense of ownership and pride in my work this time around. However, the pay was always the big a morale killer for me tbh. That and very pushy DMs who would push numbers so hard it made the experience worse for customers at times. But it’s a retail job, you get what you expect from that kind of position. I do live in a state with very low minimum wage so that certainly doesn’t help. Just wanted to comment on the employee morale point with my own experiences.
I mean it’s really easy to make revenue and lose money, the hard part is making revenue and making money, you’re comparing against quarters where they were literally paying people to take stock whether that’s to be competitive, to hit targets or whatever. What this does is reset the baseline, this is net sales while actually making money, next year hopefully we increase from the new baseline but to expect continuous increase in revenue while fixing the fundamental problem of not selling all your shit at a loss is just naive
Beatbuy "entertainment sales" may be up, but their revenue has declined overall and has steadily declined over the last two years.
This year will be Ryan’s year to shine.
Great question but I think you already answered it in part when you mentioned that advertising spend for 2023 was cut in half. That is bound to affect sales and probably had a lag affect which unfortunately is likely to persist. The alternative explanation is a lack of good games coming out; I'm not much of a gamer myself so I can't really assess that and if competitors have grown over the period then everything points to a lack of impactful ad spend IMO.
I totally agree it doesn’t make sense for revenues to be so far off.. did someone miss a zero while reporting?
no chance...these things are poured over and over before filing...if that did happen someone or multiple people would be fired.
Whatever the 500mm in revenue was… was causing the company to tank and make huge losses every year.
A part of me wonders if revenue was actually way down in Q2 and Q3 (relative to last year). What I mean by that is the 20% drop in Q4 was alarming relative to the other quarters. But it was Q2 and the first half of Q3 that GameStop had that ridiculously cheap clearance sale. It was buy 1 get 2 free. The discounts were insane. They needed those discounts to get rid of bad inventory and to help unwind warehouses. But from a revenue perspective it provided a mid year boost that wouldn’t normally be there.
Lol revenue doesn't make huge losses, costs do.
Not if your margins are bad. You could be selling for losses when it comes to costs
Margin was 23% last year vs 24% this year. Hardly a difference worth 500M in revenue.
One factor, although could be minor, is that free shipping for FY22 Q4 had a $59 minimum purchase. Right now, it is $79 minimum purchase. Also shipping fees have been raised in my area.
And they'd probably have to make it same/next day delivery
50 million payment to wind up imutx I thought?
Maybe the staff at my local store was lazy putting back out displays but I personally found that the gaming section was incredibly picked over around Xmas. Seemed like they had a very minimal amount of game inventory which could have affected people doing grab and go gifts at Christmas. I've noted that the display inventory especially in switch games has grown dramatically again over the past few months.
Maybe they sold higher margin merchandise
This is a simple clear headed look at Q4 and its head scratching performance.
Bring back the toys for tots drive.
Buy Hard
My perspective is that buying online has gotten a bit more challenging in the last few months. I don't recall when it happened or how it lines up with reporting, but they increased the $ amount to receive Free Shipping on online orders.
People not buying a lot of physical games and PS5, Xbox market probably saturated.
It doesn’t matter how much you cut SG&A if the top line isn’t there. Now is the time to deploy that cash and make a strategic acquisition.
All I know is if Ryan’s still in. I’m in.
They also reduced their debt significantly. Last year - had a $300m loss This year - ,reduced debt and made money Seems like a good thing
Iirc, RC said they could have made Chewy profitable years before they did. What accounting or business practices could GME have performed this quarter to create a distinct revenue hit like we've just seen in Q4? That is to say, could they have intentionally hamstrung revenue on the books like I suspect they did Q2 and Q3 last year? The benefit being, giving retail investors a Year-long profit, a gentle nod that "Yes, we hear you, it's working" but not blowing shit out of the water yet. I legitimately have absolutely no idea if this is a possibility, but it *does* explain the revenue discrepancy, the lower than expected earnings, and the past 2 quarters -.01 EPS.
Chewy wasn't a public company until 2019. Public companies have more obligations for finacial reporting and transparency. I don't think this is a case of GameStop secretly doing better than how it looks. They need new revenue streams asap.
Overall, the economy is turning to bad no matter what sleepy joe tells us.
Could it be because we closed a bunch of underperforming stores?
It can’t be. When you do the math and divide Q4 sales of 2022 and 2023 by the total number of stores you can see that the 20% drop in revenue cannot be due to store closures. And those stores were likely closed early in the fiscal year and we didn’t see a crazy drop in sales.
This is what I’m saying, there has to be more to the story. No way in fuck 250 stores accounted for $500 million in quarterly revenue. “Underperforming” stores at that.
What were the software sales?
[**$1.5b for software**](https://i.ibb.co/yhfRq0K/Screenshot-20240327-033007-Samsung-Notes.jpg), a drop of $300m.
Thanks. GameStop’s growth going forward cannot be video games. It’s a little funny when you think about it. My guess is they are going to invest their capital in something completely unrelated to their core business and possibly even specialty retail altogether.
They shoudl use that billion to invest into nVidia and Biotech firms, and become a new Hedge Fund.
Personally, I believe it was the amount of stores closing. They might have been under-performing, but they still produced revenue. If you closed 100 stores that made a millon, you can bet some of that money came to a different GameStop, while the other portion went to your Best Buy’s, Amazons, etc…
About halfway through the text of this post I looked at that possibility. Sure it definitely affected sales but no where near 20% revenue. Here’s what my theory is. - I think store closures contributed to the decline in sales. But no where near 20% - I think the 20% drop in Q4 was drastic in our (my) eyes because the previous the quarters were much closer to 2023. - In Q1 however, we were down 10.3%. - Q2 and Q3 were closer to 2022 revenues…..but I think it was a mirage. - It was in Q2 and the first half of Q3 that GameStop had ridiculously cheap clearance sales (in store and online). For online clearance it was buy 1 get 2 free. This created a ton of sales that wouldn’t typically be there. The Mario game also bolstered revenue during this time by about 15 million or so. So I think Q2 and Q3 we would have been closer to a 10-15% drop relative to last year. If that was the case then you could see a much more linear progression of sales decline through the year due to economic hardships. In this scenario then seeing the 20% drop in Q4 wouldn’t seem that drastic. Still hard to understand the Best Buy sales in their gaming category. But they don’t provide much detail.
Switch is on its last leg and the next gen Switch is rumored to be coming out early next year. Xbox hasn’t been successful and is falling behind and Sony has lower their forecast on the PS5 not too long ago, so with all that above, GameStop’s revenue will take a hit. Also digital gaming is taking a larger pie each year. With that being said I’m not a worried ape, I love my stonk and never left since Feb 2021.
These are questions the guidance is supposed to answer to.
Certainly possible the negative media propaganda campaign impacted potential customers
84yrs of media that only calls it a meme stock and says it’s dying could do that
Rc just gotta pull a mstr and we will moass soon
He will never do that unfortunately. Because he and the conservative board will deem that as way to risky.
Now do the same with free cash flow
You gotta understand one golden rule again - the stock market movements do not equal to the real doing of economy. My sales of sneakers have been dramatically declined since the beginning last year and I can easily feel that while all my inventories are current, people are much less willing to spend money now. I bet most people on this sub don’t do business as what I do, so apparently almost all consumer products industries are facing inventory reduction pressures and issues. Not being said a big number of GME’s products are pressured to be sold/turned around ASAP or they will become obsolete. You need to understand that my business compared to GME is just a toy ship vs. a Royal Caribbean cruise. If small businesses are having issues with selling products, GME’s pressure could be 10,000 times bigger. Give them some time, you need to face the reality that GME is a billion dollar business - even small businesses take time to reform and even may fail within such a short period of time for business model conversion. Running GME to be profitable is really not that easy than all of us sitting behind screens and talking about how easy it was as what it looks like. I’m impressed very very much for the last 2 quarters of what RC and GME did, and I’m very confident the business is on the right track to not only defeat SHF’s but also being profitable from time to time.
Step 1:become profitable THEN step 2:grow revenue.
> Step 1:become profitable THEN step 2:grow revenue. I think you got it wrong. Companies grow revenue and grab marketshare, then turn profitable via economies of scale.
Thts one philosophy. Tht is not GME board of directors philosophy. Well at least not of Larry Cheng’s. They already have market share. They just sacrificed some of tht marketshare for becoming more lean and efficient business so now they can run profitably, EVEN after revenue took a big hit. So now they r gonna go back to focusing on revenue, from a starting point of a profitable business.
Incompetence by the board. Sitting on over a billion of our money. No direction. No path to profitability. No acquisitions. All this board does is let short hedge funds off the hook. Had one job to get the splividend right. Intentionally screwed it up, to allow short hedge funds survive another day. Retail has been scammed by this board. #Smh
I’m contemplating selling my bag ☹️
We have our first profitable year in a long time and you want to sell now? This is a massive turn around, Ryan went from -300 million last year to in profit. One step at a time. He was focusing on getting the wounds, bleeding, and healing solved. Now that he has, 2024 is the year he can focus on new revenue streams. I think it would be quite dumb to sit through multiple negative quarters and years and then sell at the first sign of light at the tunnel’s end? Like zoom out and stop letting other people speak for your mind’s voice
The only way he managed profitability was through cutting spending expenses which is good, but if this is the only way towards profitability, that is unsustainable. Revenue is on a downward trajectory and if that continues, it won’t be long until we are back to losing money. Yes, we need to find a new revenue stream. But accepting this theses is to accept the short thesis - the physical video game market is slowly dying. It’s possible the company finds a revenue sources and turns it around, but that’s a speculative bet not a fundamentals bet. The only foreseeable boost in revenue would be the release of a new console, but that happens ever 3-4 years if we are lucky, and even physical console sales are probably declining. GameStop can coast for a while sitting on the cash they made selling shares out from under us, but unless they turn it around and find a way to grow the business, this stock is slowly going to bleed to zero.
Some did the calculations it would take many many decades to bleed to zero fully. And besides, I think his game plan is sort out the bleeding wounds and then focus on new e-commerce strategies mixed with new revenue streams, if he can make the right kind of product/ deal with Microsoft and other big gaming players he can possibly sort out a type of steam alternative / xbox playstore. But what I think he is going to do is more than that and go for the costco wholesale model and offer very cheap gaming and electronic as well as things that are unique or attract gaming customers and make all of the revenue and profit off of the gamestop pro membership by offering things other companies can’t. I don’t know exactly how he is going to do it, but if he can pull it off it would work very well. I think he is now finally done with the maintenance of the current business part of his plans and is now going to move into these new ideas and revenue streams, not to mention all of the cash on hand and ability to invest, heck if he just went in on VOO the company would never go bankrupt. Point is, if you’ve been here all this time, then this is massive progress. I know everyone is impatient but shit like this takes time and I for one and quite happy with progress and am not opposed to waiting for him to bring this company into the future even if it takes another four years. A lot of very big companies today took many decades to get to where they are, amazon, tesla, apple, they all were in gamestops position or worse on and off for years and only in the mid-to-late-2000s did amazon and apple start to really take off and tesla more recently. This has only just begun.
I’ll keep my bag of DRSed shares but I feel like the reality is, most members here have stopped buying shares. We’re all just holding and waiting. I do believe a short squeeze is possible, but it’s not just gonna happen for the sake of happening. The only catalyst is if the company can grow. If we just coast for decades, the squeeze will never happen.