GameStop Plans To Close 200 Stores By Next Year
GameStop is planning to close roughly 200 stores by next year, according to Business Insider. The company is the largest video game retailer in the world.
Reports indicate that the company has been hit hard by the rise in mobile gaming. Since many people can play games such as Angry Birds on their phones for the equivalent of pocket change, fewer folks are spending money on big-budget console games that carry $60 price tags.
Chief Executive Officer J. Paul Raines explained during a recent conference call that GameStop is venturing into different arenas in order to bring in more business. Raines said to shareholders:
“[GameStop is showing] strong resilience in the face of challenging category headwinds, and the new categories of digital and mobile are creating new profit pools that we are exploiting aggressively.”
Market Watch reports that the company’s third quarter earning’s exceeded expectations.
“Diligent operational efforts in a tough video game market as well as continued margin expansion of 200 basis points resulted in third quarter earnings exceeding expectations,” the company exlained. “We are now focused on delivering a successful holiday quarter driven by great titles, an unrivaled loyalty program, exciting new businesses, and the Wii U launch.”
According to the San Francisco Chronicle, GameStop revealed that three percent of its locations worldwide lose money. These outlets will be among the 200 or so stores the company intends to shutter by next year.
However, those who fear that GameStop is on its last legs shouldn’t spend too much time worrying about the future. Arvind Bhatia, analyst for Sterne, Agee & Leach Inc., believes that the company is still in a good place.
“They’re cleaning out the portfolio,” Bhatia said. “Having only three percent of your stores losing money generally is a fairly healthy number for a retailer.”
Are you surprised that GameStop is planning to close 200 stores by next year?