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Yahoo Finance Video
GameStop, the largest video game retailer in the world, has an impressive number of stores worldwide: more than 5,700 in September 2019.
While this significant number of retail outlets may have made sense over the past decade, the retail giant has become a liability as consumers purchase more and more digital games.
That's why, among other reasons, GameStop is starting to close some of its many outlets. "We are on track to close between 180 and 200 underperforming stores around the world by the end of this fiscal year," said GameStop CFO Jim Ryan on Tuesday.
And that 's not all: the company expects to close a group of "much bigger" stores from here one to two years.
Mr. Ryan said the first wave of closures was "opportunistic", while the next wave of closures would come from a closer look at each store and its area.
"We are applying a more definitive analytical approach, including profit levels and transferability of sales, which we believe will result in a much larger slice of closures over the next 12 to 24 months," Ryan told investors .
It is unclear how many stores will be closed in the long run, but it is clear that GameStop executives are taking a more deliberate approach to the next wave of stores that the company will close.
Read more: GameStop's ambitious 3-point plan to protect against destruction
Closings are the latest measure of economy achieved by the new GameStop management team – the company has already suffered two waves of layoffs.
As part of its new management team, GameStop has launched an initiative known as "GameStop Reboot" which aims to breathe new life into the retail chain.
The first step of the reboot is to resolve issues related to SG & A. This financial term refers to selling, general and administrative expenses. In simpler terms: this means a reduction in the cost of salaries, taxes, advertising and other non-production costs.
Unfortunately, this also means layoffs and closures of stores.
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