GameStop to close around 300 stores this year

GameStop has announced that at least 300 stores will cease to operate this year.

GameStop CFO Jim Bell said that around 300 stores will close this year in their attempt to reduce their number. This was a surprise as the company already mentioned that it will close all California stores indefinitely the other day. No one was expecting that the permanent closure of its stores will follow immediately.

Bell said:

“In 2020, we will continue our work to densify our global store fleet and anticipate store closures to be equal to or more than 320 net closures we saw in fiscal 2019 on a global basis.

The game store, currently, has 5,500 stores in the U.S.

He added:

“In fiscal 2020, we will continue our efforts to dedensify our store base, focused on maximizing product – productivity of the entire fleet.”

The company iterated that the closure was not caused by the novel coronavirus (COVID-19) outbreak and it is a collective decision of the board. Bell made it clear that GameStop increased its sales by 2% for the past months.

Closure celebrated by critics

Despite the company announcing that the closure was a decision made by the board, critics are convinced that GameStop has an internal issue as of the moment and the closure is just the start of something bigger.

GameStop drew flak after the company insisted to open their stores amid the COVID-19 pandemic. In recent reports, the game store continued its operations while observing ‘social distancing’ inside their store.

GameStop said on their Twitter:

“GameStop is working diligently during this unprecedented time to provide our customers and associates with the safest environment possible. We are implementing changes to our retail operations so that we may continue to provide essential products to our customers that allows them to stay connected, and provide products that allow businesses and consumers to work remotely.”

Although the government already released a memo that only essential goods are allowed, GameStop iterated that they are part of the ‘essential goods’ mentioned.

Numbers don’t lie

Bell mentioned that these past few months were good for the company. However, the bigger picture tells a different story.

GameStop’s sales decreased from 28.4% to $2.2 billion from $3.0 billion year-over-year. The total sales decline was said to be caused by the late stages of the current console cycle. The PlayStation 5 is arriving soon and Microsoft’s Xbox will have another version coming.

According to Bell, the console cycle was “putting pressure on traffic to the stores.” There is a reduced demand for hardware, software, and accessories as well. This might be true due to the gamers waiting out for the newer generation of consoles.

The software sales made a huge 27.8% drop late last year. It was attributed to delayed launches of AAA titles from 2019 to early 2020.

Featured image courtesy of Flickr/Mike Mozart

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