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How GameStop Plans To Turn Things Around

Video Game retailer GameStop has seen better days. In August, the company announced a huge round of layoffs that impacted more than 100 employees, including some members of the Game Informer staff. $ 46 per share compared to $ 46 per share back in 2015. GameStop has a plan to turn things around, and now the retailer has shared more details.

During an earnings call on September 10, GameStop shared more details on what it called the "GameStop Reboot" initiative.

"We are committed to acting with a "GameStop CEO George Sherman said in a statement. "We want to set GameStop on the correct strategic path and fully leverage our unique position and brand in the video game industry." Our strategic plan is anchored on four topics which include optimizing the core business by driving efficiency and effectiveness, creating the social and cultural GameStop, building compelling digital capabilities, and transforming our vendor and partner relationships into an evolving video game industry.

"This is a compelling new strategic vision for the company, and we have already started to execute it." all four pillars.

The four main pillars of GameStop 's reboot initiative include the following (descriptions written by GameStop):

  • Optimize the Core: Optimize the core business by improving efficiency and effectiveness across the organization, including cost restructuring, inventory management optimization, and growing the global store base
  • Become the Social / Cultural Hub for Gaming: Create the social and cultural hub of gaming across the GameStop platform by testing and improving existing core assets, including the store experience, knowledgeable associates, and the PowerUp Rewards loyalty program. [1
    9659007] Build Digital Platform: Build compiling digital capabilities, including the rec
  • Transform Vendor Partnerships: Transform our vendor and partner relationships to unlock additional high-margin revenue streams and optimize the lifetime value of every customer.

Sherman spoke at length about each of the pillars during the earnings call; Sherman had to say.

GameStop is already on its way to the ship. Just recently, the company re-launched its website (now with ThinkGeek incorporated), featuring a more streamlined shopping experience that aims to allow customers to find what they want and buy it more smoothly. Additionally, GameStop is testing new pilot stores in Tulsa, Oklahoma. Some of the store concepts are focused on competitive gaming and "home-grown e-leagues." [Http://www.playstore.com]

Another part of GameStop's plan to turn things around is to scale down. 180-200 "underperforming" is the end of the company's current fiscal year (ending February 2020). The store has 5,700 stores worldwide, so the impending closures – if they reach 200 stores – amount to around 3.5 percent of its total store base. 12 to 24 months, though a specific number was not provided.

Management of this is "developing a point of view" how many more stores it wants close in the future. The company is taking a "very specific approach" to looking into specific store closures, the company said. Specifically, the company might look to "de-dense" its store base, which means stores with overlapping trade areas might close. GameStop is so expensive, so it's not financially committed to any particular area for an extended period of time.

Do not expect GameStop to turn things around overnight, however. Sherman said on the call, "This transition will take time."

As for GameStop's latest earnings, for the quarter ended August 3, the company saw its total global sales fall 14.3 percent to $ 1.3 billion. GameStop posted a net loss of $ 415.3 million for the quarter, which is less than $ 24.9 million

New game sales fell to a massive 41.1 percent, a downturn that GameStop attributed to the announcement of next-generation consoles coming in 2020. 5.3 percent overall; The "weaker title launches" across all systems relative to the same period last year. Accessory sales, meanwhile, fell 9.5 percent, while pre-owned sales fell 17.5 percent. Digital sales fell 11.2 percent "due to weaker title launches." Collectible sales, however, jumped by 21.2 percent, proving to be the only big bright spot for the retailer.

"While we are experiencing sales declines across a number of our categories during the quarter, we have historically "Watching the end of a hardware cycle," GameStop CFO Jim Bell said.

Looking ahead, Bell said GameStop expects total sales to become down in multiple consecutive The Xbox Scarlett and the PS5 were announced at least partially, earlier than in the past. This hurt GameStop, he said, because consumers may hold out on buying systems.

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