GameStop Lays Off Dozens Of Regional Managers As It Searches For A Future

Illustration for article titled GameStop Lays Off Dozens Of Regional Managers As It Searches For A Future
Photo: Al Powers/Invision (AP)

On Tuesday, several GameStop employees took to Reddit to report that their regional sales supervisors had been laid off. These anecdotal reports, combined with tips to Kotaku about some layoffs, have since been bolstered by an email from GameStop management, whose authenticity Kotaku has confirmed, that surfaced stating more than 50 people had been let go across the company’s regional sales teams.

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“As part of our continued GameStop Reboot transformation initiative, a dedicated team, including the Retail Vice Presidents, HR, LP. and the U.S. Store Operations leadership team, have been working diligently to realign our current field regions and districts in an effort to reduce our cost structure and build efficiencies into our field leadership organization so that we can reinvest in the business,” reads an email sent to employees at affected stores on behalf of Gary Riding, the company’s senior VP of US stores.

“Unfortunately, with these changes, there are more than 50 field leaders who have been impacted and will be leaving the GameStop team,” it continues. “This includes regional, district, HR [Human Resources, and LP [Loss Prevention] leaders. These decisions are not easy, but necessary to help us reduce costs to enable investment in revenue-driving initiatives that will help grow the business once again.”

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One of the affected employees, who spoke to Kotaku on the condition of anonymity, confirmed the email was real. “It was wide spread. 50-plus DLs [District Leaders], 6 RLs [Regional Leaders], multiple Hr [Human Resources] and Lp [Loss Prevention] staff,” the person said in an email. The individual believed that most of the people targeted in the layoffs were high paid District Leaders, responsible for coordinating several individual stores, as well as under performers.

“Most districts and region are massive now,” the now former employee said. “Dls have 20 plus stores and quality of living I would assume is going to go down.” Prior to the restructuring, they said district leaders oversaw 15 stores or fewer on average. Earlier this year, GameStop reportedly laid off a dozen employees in charge of marketing and website maintenance for ThinkGeek, the toy brand acquired by GameStop in 2015 for $140 million.

The “revenue-driving initiatives” mentioned in the email could be a reference to company plans to pivot to esports. In July, GameStop announced it had partnered with a design firm to drastically change how some of its stores operated including making some that would cater to “home-grown e-Leagues” and others that would be entirely focused on retro games.

In June the company’s share price dropped by 30 percent down to $5.04, its lowest point in over a decade, following an announcement that it would get rid of its quarterly dividend to shareholders in order to save $157 million a year. Nearly two months later its share price sits at $4.02.

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At least some part of GameStop’s recent financial troubles, which prevented the company from being able to find a potential buyer earlier this year, likely stem from the shift away from physical games this console cycle. In an June 4 earnings call, CEO George Sherman reported that used game sales had dropped 20.3 percent. And earlier this week, Sony announced in its earnings call that for the first time ever that digital game sales had surpassed 50 percent of all games purchased for the PS4 during the previous quarter.

This week’s layoffs come just ahead of the company’s annual GME business conference for store leaders set to take place at the end of the month in Nashville, Tennessee.

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GameStop did not respond to a request for comment.

Kotaku staff writer. You can reach him at ethan.gach@kotaku.com

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DISCUSSION

I feel like this is the first time I heard about how they want to pivot:

drastically change how some of its stores operated including making some that would cater to “home-grown e-Leagues” and others that would be entirely focused on retro games.

I mean, I’ve never worked in retail so I’m completely talking out of my ass, but if I kinda look at this from a certain angle it doesn’t necessarily seem like the worst decision?

Like, games sales are going to happen increasingly through digital storefronts, so it’s not like focusing purely on physical game sales & used game sales is sustainable. Maybe there is a way to play up more of the physicality of the stores and make them destinations for competing in local tournaments, watching online match-ups, or dedicate certain locations to specific niche markets that revolve around physical content, like retro games.

(In other words, bring back Funcoland! I miss flipping through the newsprint catalog trying to find some cheap old game to pick up for a couple bucks.)

I’m sure there are a million reasons that won’t work, but all I can think about is how it seems similar to what a lot of comic stores have done: the comics market is getting increasingly digital and previously the average store was catered to the weekly superhero buyer, but my understanding is most of the ones that are doing well these days have doubled-down on things that require a physical space (like tabletop nights or even cafes) as refocusing products on the shelves around things that people are more interesting in buying physically these days (largely trade paperbacks and toys).

Granted, most comic book stores are not doing well these days, so focusing on examples I’ve heard about from the few success stories as suggestions for what game stores could do is (probably) wildly optimistic and naive on my part.