Even though shelter-in-place orders have forced many across the country indoors, increasing the amount of time spent console and online gaming, the retail side of the industry is facing economic uncertainty.
Amid the crisis, Grapevine-based gaming retailer GameStop announced cuts in executive and employee pay, as well as offering certain corporate support staff to have the option to temporarily furlough or reduced work weeks or pay program.
“As we continue to navigate these unprecedented times, our priority has been and continues to be on the well-being of our employees, customers and business partners,” said George Sherman, GameStop CEO, in a prepared statement. “The situation remains very fluid and a great deal of uncertainty remains, however, we entered into this time with a strong balance sheet and believe that we have sufficient cash and liquidity for the foreseeable future.”
Despite seeing 3% sales growth in the first quarter of the year, in the nine-week period ending on April 4, the company said is saw its sales drop overall by about 23% on a year-over-year basis. The company operates about 5,500 stores in the U.S., Europe and Australia. The company added that while two-thirds of its U.S. stores are offering curbside pickup for orders, about one-third remain completely closed. However, it added that in some states and countries in Europe it is working to re-open retail locations.
To cope with the declining sales, Sherman took a 50% cut in his $1.1 million salary and CFO Jim Bell is taking a 30% cut. GameStop said that beginning April 26, other operating employees will receive a 10% to 30% pay cut. On the corporate side, GameStop is lowering its capital spending and reducing inventory receipts.
The company said it is hopefully it will weather the current crisis, adding that it has about $772 million in total cash and liquidity.
GameStop drew some criticism last month after keeping its doors open, despite orders in Dallas County. Following the move, its shares declined, and the company changed course.
“We continue to proactively manage our business with a goal to increase financial flexibility and preserve cash flow in the current environment,” Sherman said. “We believe our aggressive focus on expense, inventory and capital expenditure reductions will help preserve our financial health as we work to ensure readiness and ramp up operations as soon as conditions allow.”
