GameStop Corp. (NYSE: GME), the world’s biggest video game retailer, is closing hundreds of stores in an attempt to stay afloat. GameStop CFO Jim Bell announced, “We are on track to close between 180 and 200 underperforming stores globally by the end of this fiscal year.” The chain has over 5,700 locations around the world.
Bell expects a “much larger” group of stores will be closed in the next one to two years after the company takes a deeper look at each store and its region. Bell said, “We are applying a more definitive, analytic approach, including profit levels and sales transferability, that we expect will yield a much larger tranche of closures over the coming 12 to 24 months.” The number of stores that may ultimately close has not been disclosed.
The closures are the latest cost-saving measure from GameStop’s new leadership team. They have launched an initiative known as “GameStop Reboot” that aims to improve several areas of the company’s business. As part of the initiative, the company plans to forge more exclusive packages with vendors, add higher-margin categories, expand more into PC gaming, and restructure costs. The restructuring has already led to two rounds of layoffs.
The closure announcement came during the company’s second quarter earnings call. During the call, the company revealed that its second quarter sales fell more than 14 percent to $1.3 billion, with comparable sales down 11.6 percent. Gross profit fell by more than $70 million, and its net loss expanded to $415.3 million. The results sent the retailer’s stock down 15 percent in after-hours trading.
Despite its Q2 losses, GameStop managed to buy back $62.4 million worth of shares. Its long-term debt stands at $419.1 million, cut almost in half from a year ago.