U.S. video game retailer GameStop has announced job cuts amid what one analyst called an “unsustainable” sales decline.
GameStop’s fourth quarter saw $1.794 billion in sales, 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. For the fiscal year 2023, sales were $5.273 billion compared to $5.927 billion for fiscal year 2022. Net income was $6.7 million compared to a net loss of $313.1 million for fiscal year 2022.
While net income improved for the fiscal year, the dramatic sales decline is worrying analysts. Reuters reported on comments from Wedbush Securities analyst Michael Pachter, who said: “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.
“Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic. 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.”
GameStop did not issue any comments from CEO Ryan Cohen and the retailer did not hold earnings conference call. But Reuters said GameStop had cut an unspecified number of jobs to reduce costs. As of February 3, GameStop had about 8,000 full-time staff and between 13,000 and 18,000 part-time staff, Reuters said. It had 11,000 full-time staff and between 14,000 and 27,000 part-time staff in 2023. As a result of the job cuts, expenses fell 21.2%.
In February, GameStop closed its NFT marketplace almost two years after it was announced, due to what GameStop described as NFT and cryptocurrency “uncertainty”. The closure seemed inevitable after the retailer shut down its crypto wallet in August 2023.
GameStop’s expansion into crypto began in January 2022 when it hired upwards of 20 staff members to run an NFT division. The company, most known for its retail stores in the U.S., is regularly seeking new business ventures after struggling in the physical gaming space in recent years.
The NFT marketplace closure was on the cards after GameStop revealed plans to reduce its focus on the industry back in December 2022, less than a year after it entered the NFT business.
Former CFO Diana Saadeh-Jajeh — who described herself as a “decision maker for key business strategies including NFT, digital wallet, and crypto initiatives” at GameStop — also resigned in August 2022.
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Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].
Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
