GameStop announced on Tuesday that it has implemented job cuts as part of its efforts to reduce costs amidst a backdrop of lower fourth-quarter revenue. The retailer cited increased competition from e-commerce firms and weakened consumer spending in an uncertain economy.
The Grapevine, Texas-based GameStop said its fourth-quarter revenue stood at $1.79 billion, a decline from the previous year’s $2.23 billion, as it faced stiff competition from online giants like Amazon.com and Ebay.
“An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately,” said Wedbush Securities analyst Michael Pachter, highlighting the challenges faced by brick-and-mortar video game retailers.
“Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic,” Michael Pachter said.
Notably, U.S. videogame publishers such as Take-Two Interactive Software and Electronic Arts also reported lackluster earnings recently, signaling broader challenges within the gaming industry due to factors like high borrowing costs, inflation, and a slowdown in demand post-pandemic peaks.
In addition to job cuts, GameStop’s recent cost-reduction measures included exiting operations in Ireland, Switzerland, and Austria, Reuters news report said.
As of February 3, the company employed approximately 8,000 full-time salaried and hourly associates, with an additional 13,000 to 18,000 part-time, hourly associates worldwide. This reflects a decrease from 2023 figures, which reported 11,000 full-time salaried and hourly employees and between 14,000 to 27,000 part-time hourly employees.
The company’s expenses decreased by 21.2 percent to $357.1 million, primarily driven by lower labor costs, consulting services, and marketing expenditures.
“I suspect that they will keep trimming costs to generate breakeven or better, but it is inevitable that their sales will decline to an unsustainable level,” commented Pachter on GameStop’s cost-saving strategies.
GameStop’s sales were $1.794 billion for the fourth quarter, compared to $2.226 billion in the prior year’s fourth quarter. Net income was $63.1 million for the fourth quarter, compared to net income of $48.2 million for the prior year’s fourth quarter.
GameStop’s sales were $5.273 billion for fiscal year 2023, compared to $5.927 billion for fiscal year 2022. Net income was $6.7 million for fiscal year 2023, compared to a net loss of $313.1 million for fiscal year 2022.
InfotechLead.com News Desk
