Highlights
- GameStop sales have dropped due to reduced store visits, with revenue down 19.41% year over year.
- GameStop is cutting jobs at all levels in response to the decline in revenue.
- The company is withdrawing from European markets.
A new report has suggested a decline in revenues for GameStop as "sales decline to an unsustainable level." Quarterly numbers for the company show nearly a 20% decline in revenue compared to the previous year. GameStop is cutting jobs across all levels as a result.
GameStop has made numerous deals and efforts to stay relevant in the video game retail market. Unfortunately, many of its endeavors have failed, leaving the company to find other methods of turning a profit. Most recently, GameStop shut down its NFT marketplace in February, following a trend of other video game companies leaving the same market.
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A report from Reuters shows a reduction in revenue at GameStop from $2.226 billion for the fourth quarter of 2022 to $1.794 billion for the same quarter in 2023. Wedbush Securities analyst Michael Pachter said in the report, "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." The 19.41% reduction in overall company revenue is attributed primarily to online competitors such as Amazon and eBay. These numbers reflect sales in the quarter after GameStop's CEO Ryan Cohen laid out his plan to make the company more profitable.
GameStop Cutting Jobs
- Sales decline blamed on fewer store visits
- Revenues down by 19.41% year over year
- Leaving three markets in Europe
Reduced visits to GameStop's brick and mortar locations also played a major factor in the reduction of sales revenue for the company. Although Cohen has not yet commented, he has been publicly vocal about his support for physical media in video games. Unfortunately for stores like this, the market continues to lean toward more retail purchases of games online.
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.
One of GameStop's traditionally successful techniques to get customers physically in the door has been to offer exclusive pre-order bonuses on many games. These have ranged over the years from steelbook cases to the recent Super Mario RPG Pin Set. Unfortunately, even Nintendo-exclusive memorabilia isn't enough to get collectors to come to the store when they can just buy the item on eBay.
An unreported number of jobs is being cut by the company at all levels - salary, full-time, and part-time. The company continues to offer programs like GameStop Pro Membership, but so far it hasn't been enough. GameStop will also be withdrawing its business operations in the European markets of Ireland, Austria, and Switzerland.
