The COVID-19 pandemic continues to spread, but that’s not stopping GameStop from plotting to reopen stores.
In a statement issued this week, the Texas-based retailer says that it has “begun the process of reopening stores in Italy, Germany, Austria, and the states of South Carolina and Georgia and is preparing for the potential to reopen in other operating countries and states in the coming weeks.” Following some publish pushback regarding its claims to be “essential” retail, GameStop moved to a curbside pickup program called Delivery@Door in two-thirds of its locations. The additional one-third of its store base is completely closed.
Despite an overall boom for the video game industry in March, GameStop sales for the nine-week period ending April 4 declined 23% over the same period last year.
GameStop CEO George Sherman says that the company has retained 90% of its planned sales volume for stores that have remained open for curbside pickup.
As part of its COVID-19 response, the company is implementing a variety of cost-cutting measures including reduced salaries, hours, and furloughs.
“We continue to proactively manage our business with a goal to increase financial flexibility and preserve cash flow in the current environment,” Sherman says. “We announced salary reductions for our senior management team and board of directors, as well as wage rate reductions for some other corporate and field support staff. In addition, we have offered certain corporate and other support team members the option to work under either half-time/half-pay structure or a temporary furlough program. We believe our aggressive focus on expense, inventory, and capital expenditure reductions will help preserve our financial health as we work to ensure readiness and ramp up operations as soon as conditions allow. The situation remains very fluid and a great deal of uncertainty remains, however, we entered into this time with a strong balance sheet and believe that we have sufficient cash and liquidity for the foreseeable future and will continue to take all of the necessary steps to ensure GameStop remains a strong and vibrant company at the end of this crisis.”
Sherman has agreed to a 50% salary reduction while GameStop CFO Jim Bell and the rest of the executive leadership team will take a 30% cut. The company’s board of directors will also take a 50% reduction in cash compensation. Beginning April 26, certain store employees will receive temporarily reduced pay of between 10% and 30%, while corporate support staff will have the option to either a temporary furlough or reduced workweek/reduced pay program.
GameStop has also hit the brakes on inventory purchases to match demand and has lowered spending on its turnaround projects.
Additionally, GameStop says that it did not make some of its lease payments for some of its stores and is continuing to negotiate with landlords.
Prior to the coronavirus outbreak, GameStop added new members to its board of directors, including former Nintendo of America President and COO Reggie Fils-Aimé, former Walmart U.S. President and CEO Bill Simon, and Petsmart President and CEO J.K. Symancyk, formerly of Meijer.
