GameStop Trims Workforce as Sales Slide Worsens
GameStop, a major video game retailer, has announced an unspecified number of job cuts as part of its cost-reduction efforts in response to a challenging retail environment. The company is facing increased competition from e-commerce firms, a shift in consumer preference towards digital downloads, and a general downturn in consumer spending. These factors contributed to a reported 16% drop in fourth-quarter revenue to $1.79 billion, down from the previous year's $2.23 billion.
The layoffs follow the closure of operations in Ireland, Switzerland, and Austria, as well as a previous round of cuts in December 2022 that affected its engineering and e-commerce departments. As of February 3, GameStop employed approximately 8,000 full-time staff and between 13,000 and 18,000 part-time workers. The company has also seen a significant reduction in expenses, which fell 21.2% to $357.1 million, primarily from decreased labor costs, consulting services, and marketing.
Despite the decline in sales and workforce reductions, GameStop reported an increase in adjusted earnings per share, from 16 cents a year earlier to 22 cents. The company's strategic shifts come amid broader industry challenges such as high borrowing costs, inflation, and a decrease in pandemic-era demand. Analysts like Wedbush Securities' Michael Pachter have pointed out that the rise in digital game sales is impacting physical retailers like GameStop, which must adapt to a changing market landscape to remain viable.
