It looks like the holidays weren't too kind to GameStop, resulting in another dip in profits during what is typically the biggest sales period for video games: the holiday season. As a result, some employees will be let go as a number of stores face closure.
There were loads of big, AAA titles launching through the holidays, as well as plenty of console bundles targeted at getting folks to finally pick up a PlayStation 4 or Xbox One. By most accounts, this past winter was good for the games industry. That apparently wasn't the case at GameStop. According to their recent earnings report (via Gamespot), it was a down period for the games retailer, which will result in quite a few stores closing their doors. That is, of course, a huge bummer for said sites' employees.
Apparently, the holiday season sales slump wasn't a big anomaly for GameSpot, as their entire year was a bit on the down side. This holiday season, though, they're reporting a decrease of about 13.6 percent in comparison to the previous year, which is a pretty significant figure when you consider that the holidays are when everyone is running out to by new games and consoles. That's further bolstered by the fact that some of the biggest AAA games of the year come out around that time, which should provide a surge in sales.
According to the report, GameStop was simply unable to keep up with the competition this year. Other retailers were offering a wide variety of those bundles mentioned earlier, as well as some killer Black Friday and Cyber Monday deals. With more competition in the games space, GameStop took a pretty heavy hit this year. They also claim that certain big games did not perform as well as they had hoped, though no specific titles were listed.
In the end, GameStop has stated that it plans to close between two and three percent of its stores to make up the difference, which totals about 225 locations worldwide. That's a lot of people who are about to find themselves without a job. While no specific locations were discussed, we imagine they'll start with the stores that aren't pulling down very big numbers.
While we're sure that the reasons listed above contributed to a rough holiday season for GameStop, we can't help but wonder if consumer perception is another factor they might want to take into consideration. When shady practices like the "Circle of Life" program are exposed (that one encouraging employees to be less-than-honest about new copies of games when a used copy is available), it's no surprise that folks are going to be less likely to drop by your store to pick up the latest Call of Duty.
The good news for GameStop is that their swag sales are up, with a 27.8 percent increase seen in the sale of stuff like models, toys, plushies, mugs and the like. Apparently that isn't enough to keep a store afloat, though.