(UPDATED, 3:30 p.m.) Increasing competition and digital sales may be to blame for GameStop’s plan to shutter at least 150 of its 7,500 stores worldwide.
The Texas-based retailer announced last week a plan to close 2-3 percent of stores in 2017. GameStop operates two locations in the Wausau metro area: one at Wausau Center mall and the other in Rib Mountain. Company officials have not yet said if either location is slated for closure, and a timeline has not been specified.
“The 2-3 percent store closures we announced as part of our 2016 year-end earnings announcement is part of a multi-year strategy we first introduced in 2011, whereby we are focused on rationalizing our global store footprint to ensure we have the right mix of stores and merchandise that meets our customers’ needs,” said Joey Mooring, director of corporate communications for GameStop Corporation. “That said, every year since 2011, we have closed stores globally when we see a better path to serving our customers more efficiently.”
GameStop CEO Paul Raines said in a fourth-quarter release the company’s non-gaming businesses “drove gross margin expansion and significantly contributed to our profits,” but the video game side didn’t do so well.
” … The video game category was weak, particularly in the back half of 2016, as the console cycle ages,” he said. “Looking at 2017, Technology Brands and Collectibles are expected to generate another year of strong growth, and new hardware innovation in the video game category looks promising.”
GameStop’s total global sales for the most recent quarter dropped 13.6 percent to $3.05 billion, while consolidated comparable store sales declined 16.3 percent. The Fortune 500 company blamed the dip on “weak sales of certain AAA titles and aggressive console promotions by other retailers on Thanksgiving Day and Black Friday.”
GameStop also blamed “weak sales of certain AAA titles,” for the drop in software sales. While none were named, in Activision’s call with investors in early February, the publisher acknowledged that Call of Duty: Infinite Warfare had “underperformed.” In December, CNBC reported, citing subscriber-only data from NPD, that sales of physical copies of Infinite Warfare in November were down 50 percent from the November 2015 launch of Black Ops 3.
“As far as which stores will be closed this year, we do not know that at this time,” Mooring said. “That is something that will take place throughout the year, just like we have done in previous years.”
The news for GameStop isn’t all bad. the company anticipates opening approximately 35 new “Collectibles” stores globally, and approximately 65 new “Technology Brand stores,” Mooring said.