Workers at a York-area distribution center are the latest casualties in GameStop‘s effort to cut costs and rebuild profits.
- The Texas-based video-game retailer is planning to shutter its 700,000 square-foot warehouse at 20 Leo Lane in Manchester Township and lay off the 155 people who work there, according to a notice sent this week to state officials.
- “This closure is expected to be permanent,” the company said, noting that employees will be laid off starting around March 15.
Why is this happening: Efforts to reach the company were not successful. But securities filings and news reports indicate GameStop has been working to slash expenses and retool its business.
- In a memo last fall, GameStop chairman and CEO Ryan Cohen reportedly told employees that “extreme frugality” is needed for the company to survive, according to the Wall Street Journal.
- Cohen — co-founder of online pet-products retailer Chewy — was named GameStop’s CEO last fall after taking over as chairman in 2021.
- The company has struggled to adjust to the changing ways people play video games — using online streaming services and mobile devices instead of hard copies of games and fancy consoles plugged into televisions.
- For nine months ending Oct. 28, the company saw an 18.1% decline in the sale of video-game accessories, according to its most recent earnings report.
What about the other numbers: GameStop narrowed its losses for the first nine months of its most recent fiscal year but it also saw sales shrink.
- The company had a net loss of $56.4 million for the nine months ending Oct. 28, down from a loss of $361.3 million for the same period a year ago.
- Sales for the most-recent nine-month period were nearly $3.5 billion, down from $3.7 billion.
- The company has taken several steps over the last year to shed costs.
- In January 2023, the company announced it was closing a warehouse in Kentucky.
- That was followed by a decision last spring to close all the company’s stores in Ireland.
- And earlier this month, the company said it was pulling the plug on its 18-month-old marketplace for NFTs, or nonfungible tokens, collectible digital assets that can be bought and sold.
- The York County warehouse, which is off Interstate 83, is owned by Chicago-based First Industrial Realty Trust.
- GameStop began leasing the building in 2021 after it was vacated by an auto-parts distributor.
Remember the meme: Shares in GameStop were the focus of a pitched battle between mass-market investors and hedge fund traders in 2021.
- Hedge funds were betting on an expected drop in the company’s stock price, known as short selling.
- But people in the online community reddit rallied in an effort to drive up the price instead.
- As a result, GameStop became known as one of the first so-called meme stocks — stocks that generate a devoted following on social media.