Retailer GameStop has announced that they’ll be closing even more stores this fiscal year than they originally planned to. The latest numbers sit at between 400 and 450 stores, which will be closed globally by the end of the current fiscal year.
This news came out of the company’s recent Q2 earnings call with investors. The company’s CFO, Jim Bell, explained that 388 stores have been closed this year so far. 206 of those closures occurred during Q2.
Towards the end of last year, the company projected that they would close almost as many stores as they had closed in 2019. At 321 stores, the company hit that number, and they’ve now gone beyond it for 2020.
These store closures are part of GameStop’s de-densification process that has been going on for almost a year now. The overall vision is to cut costs by closing stores that are less profitable, and maximising the efforts of those profitable ones. So far the plan has seen these stores close, as well as a total closure of operations in Sweden, Norway, Denmark, and Finland.
Bell told investors that the de-densification process was a large part of the way through, but there’s still a lot to do. The reason for this is that the company is planning to allow leases to simply run out, rather than cutting them short. While this may lead to some added losses in the short-term, it will avoid any additional costs incurred from contractual penalties for stopping those leases.
By letting leases run out, GameStop also allows their stores ample time to sort out the stock that they’re left with. These products will almost certainly need to be shifted to other stores, but with the luxury of time, it should be no problem at all getting all of that sorted.
Unfortunately a number of people are going to lose their jobs as a result of these store closures. This is unavoidable, since the company is trying to focus only on profitable stores. However, there is also a plan to transform some GameStop stores into unique areas for certain gaming niches, such as retro gaming arenas. These stores could see some employees kept within the company for the near future.