Retailer GameStop has confirmed it will be closing “between 180 and 200 underperforming stores globally by the end of the fiscal year”. In the company’s latest financial report, CFO James Bell confirmed that while 95 per cent of GameStop’s 5700 global stores are profitable,”we have a clear opportunity to improve our overall profitability by de-densifying our chain” after the company revealed a net loss of $415 million (compared to last year’s loss of $24.9 million), and an adjusted net loss of $32 million in Q2.
Further store closures are likely to happen, too.
“While that is an impressive statistic, we have a clear opportunity to improve our overall profitability by de-densifying our chain,” Bell said (thanks, GI.biz, via PC Gamer). “That work is well underway. We are on track to close between 180 and 200 underperforming stores globally by the end of this fiscal year. And while these closures were more opportunistic, we are applying a more definitive, analytic approach, including profit levels and sales transferability, that we expect will yield a much larger tranche of closures over the coming 12 to 24 months.”
Looking ahead, the company is bracing itself for further losses YoY, and says the truncated current-gen console cycle will “lead to a much lighter title slate through the rest of 2019 and early 2020”.
“We expect our year-over-year sales to be down over the next three to four quarters reflecting the end of [the console] cycle,” Bell added. “Compounding this negative impact on sales is the fact that console makers have confirmed the launch earlier than they have in the past. We anticipate that this will lead to much lighter title slate through the rest of 2019 and early 2020 given the end of the cycle timing for current consoles.
“As a result, at this time we expect a percentage decline of comparable same-store sales for 2019 to be in the low teens, which includes a difficult comparable sales challenge from last year, as we’re up against blockbuster titles like Red Dead Redemption 2, 2018’s number one volume title, without a comparable launch in 2019.”
As part of a “workforce reduction”, GameStop laid off more than 120 people last month, including almost half the editorial team employed at its subsidiary magazine, Game Informer. The cuts affect staff working at the company’s corporate headquarters in Grapevine, Texas and Game Informer’s HQ in Minnesota, and equate to almost 14 per cent of its global workforce.
“As part of the previously announced GameStop Reboot initiative to transform our business for the future and improve our financial performance, we can confirm a workforce reduction was implemented impacting more than 120 corporate staff positions, representing approximately 14% of our total associate base at our company headquarters as well as at some other offices,” a GameStop spokesperson said at the time.
