GameStop's Continued Store Closures in 2026 Reinforce Structural Retail Decline

What happened

GameStop has continued to close more stores in 2026, as reported by the New York Post, aligning with its ongoing strategy to rationalize the physical footprint amid declining revenue. This move is part of a broader cost-cutting effort detailed in recent SEC filings, where management aims to exit underperforming locations to sustain thin operating margins. However, the DeepValue report notes that revenue has fallen sharply, from $2.23B in 2023 to $1.28B in 2025, with earnings improvements relying on non-operating gains and working capital shifts rather than core growth. The company's balance sheet remains risky, with $4.2B in convertible notes and significant bitcoin exposure, adding volatility to equity value. Thus, the store closures confirm the base-case scenario of a shrinking retailer facing persistent headwinds from digital game distribution.

Implication

The ongoing closures risk further eroding store traffic and trade-in volumes, which are essential for the pre-owned ecosystem and could accelerate revenue decline. Without sustainable operating profitability, reliance on bitcoin and non-operating income exposes the stock to crypto market downturns and potential dilution from convertible notes. For fundamentals-driven investors, the lack of margin of safety at 1.7x book value and elevated P/E ratios necessitates caution or avoidance. Monitoring should focus on whether closures lead to stabilized revenue or deeper erosion, and on management's capital allocation towards debt reduction versus speculative assets. In the near term, this news underscores the need for evidence of operating income growth or leverage reduction to shift the bearish thesis.

Thesis delta

The news of continued store closures does not materially shift the investment thesis; it aligns with the existing view that GameStop's core retail business is structurally declining. It reinforces the bearish stance that the equity is effectively a leveraged bitcoin vehicle with high downside risk, absent signs of sustainable operating profitability. Investors should maintain the strong sell rating until tangible progress is made in de-risking the balance sheet or achieving multi-quarter operating income growth.