After trying to stay open during the beginning of the Coronavirus pandemic and eventually closing lot of their stores due to the lockdown, GameStop has provided a business update revealing how they plan to continue business during the pandemic. This includes reopening some of its stores and salary reductions for executives and some of its workers.
Executives receiving a pay cut include 50% for George Sherman, Chief Executive Officer, 30% for Jim Bell, Chief Financial Officer, and the remainder of the executive leadership team. Also, the Board of Directors has reduced cash compensation to directors by 50% temporarily.
GameStop also announced:
- Certain other employees will be paid between 10-30% less temporarily. This will begin on April 26
- Certain members of the corporate staff have been offered either a temporary furlough or reduced workweek/ reduced pay program
- Reduced inventory receipts to match demand with a focus on key hardware, software, and accessories products
- Lowered capital spending to focus on mandatory maintenance or near-term high-value strategic projects
- Due to the impact of governmental regulations and certain landlord decisions to close properties, the Company did not make a portion of certain lease payments and remains in discussions with its landlords regarding ongoing rent payments, including potential abatement, deferral and or restructuring of future rents during this period of COVID-19 related closure.
GameStop also provided a sales update during the pandemic. During the nine-week period ending on April 4, 2020, sales declined 23% on a year-over-year basis. During the fiscal March period ending on March 21, 2020, when the company had to close its stores, U.S. store sales grew 3% due to the increased demand. There was a surge in demand across products that people need to work, learn, or play from home. Australia increased store sales of approximately 64% during the five-week fiscal March period. GameStop says that it had approximately $772 million in total cash and liquidity as of April 4, 2020. GameStop expects to continue to have sufficient liquidity and financial flexibility during this time.
“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,” George Sherman said. “I am very proud of the resilience that our teams are showing during this time. In very short order, we implemented a temporary curbside pick-up process at the majority of our U.S. stores in accordance with state and local ordinances. By using our omnichannel buy online pickup in-store and ship from store capabilities, we are able to operate in a safe and regulatory compliant way while meeting the increased demand for our products as more consumers work, learn, and play from home. Importantly, since we closed stores to the public on March 22nd, through omnichannel fulfillment, we have retained over 90% of our planned sales volumes in the two-thirds of our stores that are conducting curbside operations. We believe this speaks to the strength of our enhanced omnichannel capabilities implemented in the fall of last year.”
In addition to two-thirds of its stores available for curbside pick up, GameStop has announced that the process of re-opening its stores in Italy, Germany, and Austria has begun. They are also preparing to re-open stores in other operating countries and states in the coming weeks such as in South Carolina and Georgia.
George Sherman said: “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 and will continue to take all of the necessary steps to ensure GameStop remains a strong and vibrant company at the end of this crisis.”