GameStop's woes continue as the company now announces the closure of up to 200 stores.
It’s not been a good year for GameStop. After reporting a net loss of $32 million for the second quarter, along with a commensurate sales drop of 14.3%, GameStop’s stock fell by 26%. And it continues to tank further after the announcement last month that much of GameStop’s middle management would be let go, including most of Game Informer’s senior editorial staff.
But when it rains, it pours. GameStop CFO James Bell said during the most recent earnings call that the company plans to close anywhere from 180 to 200 stores by the end of the year, and to expect even more closures on top of that.
"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," Bell said.
An earlier leak last week said that GameStop's eventual plan is to close way more than just 200 and will ultimately lead to the closure of half of GameStop's 4,400 locations by the end of 2019. The leak further says that GameStop will eventually shut down almost entirely, closing nearly every store with just a few locations operating.
Digital sales are a growing share of the gaming market to the exclusion of physical sales. After all, hard drive space on consoles continues to increase, and with day 1 patches often being a sizable portion of the entire game’s data requirements, there’s less incentive now than ever to have a physical copy of a game.
GameStop’s previous plan was to switch from game sales to game memorabilia and game-adjacent items such as accessories and plushies, but that hasn’t made up for the shortfall on big-ticket items like brand new consoles, which has been taken over by the likes of Amazon and Walmart.
Last July, GameStop announced plans to again pivot away from merely being a store and instead rebrand itself as a community hub for gaming, including e-sports, tabletop, and more. Only a select few locations will make the transition, however.
Source: Engadget