National Video Game Retailer Preparing To Close Many Of Their 3,000 Stores

Plenty of retailers have been struggling financially lately, with fewer customers shopping at their stores. To combat the issues, many have decided to close some of their locations. It's a tactic that's already been used by Sears, Walgreens, CVS, Pizza Hut, Boston Market, TGI Fridays, Foot Locker and many others, including GameStop. In 2020, the company shuttered over 400 stores, and it seems like they are getting ready to do it again, but even bigger.

In a press release put out in lieu of an earnings call this week, they revealed that their Q2 net sales fell 31.4%, down to $798 million from $1.2 billion a year ago. While they were still profitable, with income of $14.8 million, they posted an operating loss of $22 million over the past three months. Now, they are undergoing a store portfolio optimization review that will identify locations for closure. They stated the review "may result in the closure of a larger number of stores than we have closed in the past few years."

While that implies the company will still continue only with fewer stores, one analyst isn't so sure. Michael Pachter told Retail Dive that GameStop faces "insurmountable" growth challenges, including the gaming industry's transition from physical to digital media, the growth of subscription services and "the company's total lack of any strategy to enter new categories with growth potential." He added, "While we admire GameStop's ability to manage operating losses, we think it would be just as reasonable for management to close all of its stores and operate as a bank."

The company has a more positive outlook, writing, "GameStop has many strengths and assets, including strong household brand recognition and a significant store network." They plan to increase product availability and improve the customer service experience, among other things, to turn around their financial situation.

There is no word yet on when they will release a list of which of their 2,915 stores they plan to close.