GameStop to close 200 stores in cost-cutting move
GameStop Corp.'s CEO said the company plans to close up to 200 underperforming stores across the country by next February in an effort to turn around the struggling video game retailer.
George Sherman, who became CEO at the company last April, told CNN Business on Wednesday that the store closings are part of a cost-saving plan, telling the network the company “is in a tough place” and needs to make changes to keep up in the video game industry.
“That's part of brick-and-mortar retail today,” Sherman told CNN. “Part of being a good retailer is you're not trying to hold onto every store.”
There are more than 60 GameStop locations in the suburbs, but Sherman did not specify any that will be closed.
The Grapevine, Texas-based company posted a wider second-quarter loss earlier this week and issued a forecast that was far below analysts' estimates. GameStop said comparable store sales, a key measure of performance, will slump in the low teens this year, more than an earlier forecast of 5% to 10%.
The company eliminated 14% of its corporate staff last month and fired at least six journalists from its gaming publication. The company said there are no further plans for layoffs.
The retailer has lost business as gamers increasingly purchase titles online, and the once-lucrative business of selling used titles dried up. Last year, GameStop's board reversed course on a decision to diversify into mobile-phone sales, unloading a chain of stores for $700 million. Sherman has promised to refocus on the core video game business through such steps as redesigning the website and sponsoring esports events in stores.
GameStop eliminated its dividend in June and renewed its focus on cost controls. Savings from expense reductions could add up to $200 million annually, twice original projections, GameStop said. Management has sought to bolster the stock through share repurchases, including a tender for 12 million shares in July at $5.20 each. The retailer said it has about $237 million remaining under its existing buyback authorization.
Bloomberg News contributed to this report.