GameStop Hit By Layoffs As Analyst Predicts 'Unsustainable' Sales Decline
Share price also takes a tumble
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GameStop has announced that it has made an unspecified number of job cuts as it grapples with a sharp decline in revenue.
As reported by Reuters (thanks, IGN), the firm saw $1.794 billion in sales for its fourth-quarter of the fiscal year; a fairly drastic drop from the $2.226 billion earned over the same period the previous year. Net income faired a bit better at $63.1 million compared to $48.2 million, but there seems to be growing concern at the decline in sales as digital media sinks its teeth into the industry.
In fact, Wedbush Securities analyst Michael Pachter has stated that sales may decline to an "unsustainable level" if GameStop's management is unable to come up with a plan to get customers back in stores:
"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 has recently taken measures to reduce its spending, including removing its operations entirely from Ireland, Switzerland and Austria, along with decreasing its full-time workforce by around 3000 staff members. It's not known exactly how many have been affected by this most recent round of layoffs.
As a result of the news, GameStop's share price has taken a bit of a tumble from 15.18 USD to 13.06 USD at the time of writing.
