You are using an older browser version. Please use a supported version for the best MSN experience.

The world's biggest video game retailer, GameStop, is closing hundreds of stores as it attempts to stay afloat — and that's just the first wave of closures

Business Insider logo Business Insider 3 days ago Ben Gilbert

Replay Video
Video by Yahoo Finance

The world's largest video game retailer, GameStop, has a staggering number of stores around the world: Over 5,700 as of September 2019.

While that massive number of retail locations might've made sense in a previous decade, it's become a liability for the game retail giant as consumers increasingly buy digital games.

That's why, among many other reasons, GameStop is beginning to shut down some of its many retail locations. "We are on track to close between 180 and 200 underperforming stores globally by the end of this fiscal year," GameStop CFO Jim Ryan said on the company's Q2 earnings call Tuesday.

And that's not all: The company is expecting to close a "much larger" group of stores in the next one to two years.

The initial wave of closures, Ryan said, are "opportunistic," whereas the next wave of closures will come from a deeper look at each store and its region.

"We are applying a more definitive, analytic approach, including profit levels and sales transferability, that we expect will yield a much larger tranche of closures over the coming 12 to 24 months," Ryan said on Tuesday's investor call.

It's unclear how many stores will be closed in the long run, but it is clear that GameStop execs are taking a more deliberate approach to the next wave of stores the company closes.

Read more: Inside GameStop's ambitious 3-point plan to save itself from destruction

The closures are the latest cost-saving measure from GameStop's new leadership team - the company has already had two waves of layoffs.

Under its new leadership team, GameStop launched an initiative known as "GameStop Reboot" that's intended to breathe new life into the retail chain.

The first step of the reboot involves addressing issues with so-called SG & A, a financial term that stands for Selling, General and Administrative Expenses. In simpler terms: It means lowering the cost of salaries, taxes, advertising, and other nonproduction costs.

Unfortunately, it also means layoffs and store closures.

AdChoices
AdChoices

More from Business Insider

Business Insider
Business Insider
image beaconimage beaconimage beacon