A famous game retailer now begins layoffs as sales fall and competition grows from streaming services, the company confirms.
GameStop said Tuesday in a regulatory filing that it recently eliminated an undisclosed number of jobs as a cost-saving measure.
The move comes as the video game retailer reported double-digit net sales declines in the fourth quarter and for the full year ending February 3.
Fourth-quarter net sales fell more than 19% year over year to $1.79 billion from $2.23 billion last year.
Net income for Q4 rose 31% to $63.1 million, up from $48.2 million, but gross profit fell 16% to $419.2 million, down from $499.8 million a year earlier, the company said.
The company reported net sales for the full year fell 11% to $5.27 billion from $5.93 billion the prior year.
It swung to a net income of $6.7 million from a net loss of $313 million in the year-ago period.
GameStop said this week it had about 8,000 full-time salaried and hourly employees and between 13,000 and 18,000 part-time, hourly workers globally, depending on the time of year, as a result of the seasonal nature of the business.
A mix shift in software sales, fewer large game console releases, declining hardware sales and the growth of subscription services contributed to GameStop’s Q4 and full-year sales declines despite an extra week on the calendar, Wedbush analysts led by Michael Pachter said in a Wednesday note.
“With its current cash balance, GameStop can weather $100 million of annual losses for a decade or more.
However, should its revenues decline by $150 – 200 million per year (which we think is highly likely given its lack of clear strategy to replace lost games sales), it may have trouble trimming costs fast enough to stem the growth of its losses.
If we’re right, GameStop has a likely runway of no more than five years,” Pachter said.
“We see nothing in their ‘strategy’ that will stop the revenue declines and nothing in their investment plans that will allow them to survive for more than a decade,” Pachter said.
“We expect them to keep losing more money each year and eventually shut down.”
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Also Read: A Massive Discount Retailer Is Now Closing 600 Stores
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Other Economy News Today
A popular radio company now declares an unexpected bankruptcy after reporting $1M to $10 million in debt with the same range of assets.
High Plains Radio Network, a company that operates stations in Texas, Arkansas and New Mexico, has filed for Chapter 11 bankruptcy.
The company said in its filing that funds would be available for unsecured creditors.
High Plains Radio Network has not outlined a financing plan for its bankruptcy or any plans for how it intends to move forward, reports TheStreet.
High Plains Radio Network Founder Monte Spearman has more than 30 years of broadcast experience working in small markets.
He said that while local radio remains essential, especially in smaller markets, the operating conditions have become challenging.
“The rules of radio ownership have changed, retail has changed, and digital competitors have changed advertising,” he posted on the HPRN website.
“Don’t get me wrong, research confirms that 90% of Americans still listen to broadcast radio every week.
Even with new audio competitors, the magic of providing local information, news, and entertainment on local radio still works for listeners and for advertisers.”
Spearman built his company with a lower cost structure than local radio stations traditionally have.
“The goal for me was to stay local, but to significantly reduce operating costs,” he said.
“Many of my friends in the radio business told me I could do one or the other, but not both! I was not convinced!
I knew a large part of the answer for increased efficiency and cost reduction was in the better and more creative use of existing technology.
Through trial and error and helpful employees, that has proven to be true for our HPR Network.”
He was successful in doing that, but that was not enough to operate profitability.
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Also Read: A Giant Company Now Announces Unexpected Layoffs in California
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