GameStop to Close 200 More Locations, Promises Further Reorganization
GameStop's had a rough 2019 so far, and it's getting even rougher.
The Texas-based company released its second quarter financial report yesterday and, as a result of some substantial profit losses, announced during the report conference call it will close up to 200 more stores.
This is on top of the previous job losses we reported on just a few months ago, not to mention the layoffs that recently hit Game Informer, which is owned by GamesStop.
The company's total sales decreased by 14.3% in the second quarter, including a 41% drop in hardware sales, a 5% decrease in software sales, and a 17.5% decrease in pre-owned sales, among other things. All told, it adds up to nearly three times as much profit loss for the company in the second quarter as the first quarter, or $32 million, up from the first quarter's $10.2 million loss.
Before reaffirming the company's commitment to its four new guiding tenets, GameStop CEO George Sherman said:
We are committed to acting with a sense of urgency to address the areas of the business that are critical to achieving long-term success and value creation for all our stakeholders.
We will set GameStop on the correct strategic path and fully leverage our unique position and brand in the video game industry.
However, Jim Bell, GameStop's CFO, also recognized that the company's second-quarter hardships aren't uncommon during the end-of-console-lifecycle phase.
Nonetheless, it's sparking yet another round of reorganization and plans to close under performing stores to try and stabilize the company's decline.
Mike Futter, who wrote on the story for GameDaily.Biz, believes GameStop is potentially heading in another direction, though, one meant to end in a buyout:
But nothing about GameStop's behavior reads to me as anything more than "get healthy enough to find a buyer." And with digital such a small portion of the $GME sales mix and a continuously growing portion of publisher revenues, something just isn't adding up.— Mike Futter (@Futterish) September 11, 2019
If the current performance continues, that may be what ends up happening, as Niko Analyst Daniel Ahmad reported GameStop's stock tumbled by 15% after the financial report was published.
Still, stock prices don't always determine success, as the drastic drop-off in Nintendo's stocks after Animal Crossing: New Horizons was delayed attests to.
It's always possible GameStop's new plans will be successful, and at least some employees will be able retain their jobs. We'll just have to wait and see.