GameStop (GME) has revealed that it recently laid off an unknown amount of employees from the company amid a sharp decrease in sales, according to a new SEC 10-K filing.
“As part of our strategic plan to achieve profitability, we have recently undertaken cost reduction measures and other initiatives to improve the efficiency of our operations, including initiatives to reduce headcount,” said GameStop in the filing.
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The company also reported in the filing that it has 8,000 full-time salaried and hourly associates and between 13,000 and 18,000 part-time, hourly associates worldwide.
This is a significant decrease from what it reported in its 10-K SEC filing last year where it said it had 11,000 full-time salaried and hourly associates and between 14,000 and 27,000 part-time hourly associates worldwide.
The recent cost-cutting move from GameStop comes amid the company’s struggle to offset declining sales. In its fourth-quarter earnings report for 2023 GameStop revealed that it only earned $1.794 billion from net sales during the quarter, which is a decrease from the $2.226 billion it earned during the same time period the year before.
GameStop also claimed in the SEC filing that ever since gaming consoles from companies such as Sony, Nintendo and Microsoft started allowing users to digitally download games (and even created consoles that only allow digital downloads) the change has taken a toll on sales.
“Downloading of video game content to the current generation video game systems continues to grow and take an increasing percentage of new video game sales,” said GameStop in the filing. “If consumers’ preference for downloading video game content in lieu of physical software continues to increase, our business and financial performance may be adversely impacted.”
Sales of the video game consoles themselves have also taken a hit in recent months. Sony said in its latest earnings report, which was released on Feb. 14, that it struggled to sell its PlayStation 5 during the critical holiday season months last year, only selling 8.2 million units. It also warned that for the PS5, there will be a “gradual decline in unit sales from next fiscal year onwards.”
Nintendo’s gaming console, the Nintendo Switch also faced a 7.8% year-on-year decrease in hardware sales during the quarter, according to its most recent earnings report. Software sales for the Switch also declined by 4.7% year-on-year for the quarter.
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