Challenges Continue Despite Return to Profitability
GameStop has reported its latest earnings briefing, revealing plans for further layoffs amid a decline in sales. The video game retailer confirmed that it is cutting jobs, though the exact number of layoffs has not been specified.
These layoffs may be linked to GameStop’s recent announcement of closing a Fulfillment Center in York, Pennsylvania, affecting over 150 employees. With approximately 8,000 full-time salaried and hourly workers globally, alongside 13,000 to 18,000 part-time hourly workers depending on the season, the company’s workforce has seen a substantial reduction from previous years.
In its latest fiscal year, GameStop reported a notable decrease in expenses, largely attributed to reduced headcount. However, despite efforts to trim costs, analysts like Michael Pachter anticipate further sales declines, driven by increasing digital game sales that erode foot traffic to physical stores.
For GameStop’s fiscal fourth quarter, sales dipped from $2.226 billion to $1.784 billion, yet profit increased from $48.2 million to $63.1 million. Similarly, annual sales dropped from $5.927 billion to $5.273 billion, while net income saw a significant upswing from a loss of $313.1 million to a profit of $6.7 million.
GameStop’s pursuit of sustained profitability has led to store closures in Ireland, Switzerland, and Austria, totaling 287 stores shuttered worldwide, leaving 4,169 remaining. Following the turbulent events of 2021, which saw GameStop’s stock price skyrocket due to a “short-squeeze,” the company’s new leadership, including CEO Ryan Cohen, enacted cost-cutting measures to restore profitability, including layoffs and store closures.
Despite these efforts, GameStop’s stock price fell over 10% following the latest earnings announcement, reflecting concerns over declining sales. Nevertheless, GameStop’s shares remain significantly higher than five years ago, showcasing the ongoing volatility surrounding the company.
In related news, Game Informer, GameStop’s magazine, now offers subscriptions directly, eliminating the need for participation in GameStop’s loyalty program or individual issue purchases.