GameStop Lays Off Additional Workers, Reduces Crypto Exposure After Weak Third Quarter

[ad_1]

GameStop is undergoing another round of layoffs, according to a LinkedIn post by a GameStop executive. While the extent of the layoffs is unknown, the cuts would have a bigger impact on the cryptocurrency side of the business, where at least six software engineers said they were laid off, according to Axios.

Kokatu saw an email from CEO Matt Furlong to GameStop employees, but while the message reportedly confirmed the layoffs, it didn’t specify how many jobs were affected or which parts of the business were affected.

We recently completed several projects that were part of the initial phase of our transformation and are enabling the business to operate with increased efficiency, Furlong wrote in the post. In addition, we continued to gain clarity on the adequate level of corporate staff needed to achieve our profitability and growth objectives. These two factors informed the decisions that were made throughout the organization.

The email called the decision to lay off workers proactive but difficult and blamed high inflation and weakened consumer confidence that have generated headwinds in the retail industry. These factors weighed heavily on GameStops’ results for the third quarter of 2022, which ended October 29. Sales fell to less than $1.2 billion, down 8.5% year over year.

GameStop seeks to reverse the trend by reducing costs. The retailer launched a previous round of layoffs in July 2022 and replaced its former chief financial officer. The strategy is starting to pay off, with selling, general and administrative expenses down to 32.7% of sales in Q3 2022 from 34.1% in Q2 2022.

Now that we are emerging from the rebuilding phase of our transformation, GameStop has a solid foundation from which to seek near-term profitability and long-term sustainable growth, Furlong wrote in the post seen by Kokatu.

Additionally, while the retailer hasn’t directly mentioned its crypto or NFT efforts in any of its releases, it appears GameStop is further stabilizing its operations by rolling back some of its initial investments in the space.

The company has proactively minimized cryptocurrency risk exposure throughout the year and currently holds no physical token balances, Furlong said on a call with investors. While we continue to believe there is long-term potential for digital assets in the gaming world, we do not and will not risk significant shareholder capital in the space.

The caution may be due to a short-lived partnership with now-defunct crypto exchange FTX. The two companies began working together in mid-September as part of GameStops’ efforts to establish a marketplace for digital assets, but both parties had agreed to dissolve the deal by Nov. 11 when FTX filed for bankruptcy in under Chapter 11.

Despite the failures, GameStops’ NFT strategy still seems to be moving forward: the beta of its marketplace, launched on October 31, remains active.

[ad_2]