GameStop CEO Takes Pay Cut As The Retailer Prepares To Re-Open Some Stores Amid COVID-19 Crisis
The video game retailer provides an update on how its business is performing, with Australia standing apart as a very strong market.
Video game retailer GameStop was struggling before the COVID-19 pandemic, and now the store is facing an even more uncertain future. The company has now outlined some of its "business updates" related to the virus, and it includes pay cuts, store closures, and more.
Starting off, GameStop CEO George Sherman has announced he's cutting his salary by 50 percent, while chief financial officer Jim Bell and the rest of the executive team are dropping their salaries by 30 percent. Additionally, members of the board of directors--including Reggie Fils-Aime--are seeing their compensation decreased by 50 percent.
GameStop also announced that "certain other employees" at the company's offices around the world will see their pay reduced between 10 percent and 30 percent starting April 26. Additionally, some members of GameSpot's corporate support staff have been offered a temporary furlough or fewer hours of work for less pay. What's more, GameStop said it did not pay some of its lease payments for its stores due to government regulations and decisions made by landlords.
The company also provided an update on its store footprint. About one-third of all US stores are closed, while the remaining two-thirds are open, but only for curbside pick-up of orders. GameStop is preparing to re-open its stores in South Carolina and Georgia, after local governments announced that could happen, while stores are also re-opening in Italy, Germany, and Australia.
GameStop also said that 100 percent of its EB Games stores in Australia remain open, and are in fact performing well. In March, sales in Australian stores increased by 64 percent compared to the same period last year.
In terms of GameStop's business performance, the company said store sales for the nine-week period ended April 4, 2020 fell by 23 percent. A downturn was of course expected given the numerous store closures across the world.
Finally, CEO George Sherman said GameStop has a "strong balance sheet" and enough cash and liquid assets to help get the company through this difficult time. Specifically, GameStop said it had around $772 million cash and liquid assets as of April 4. This should be enough to "navigate the current environment," the company said.
2020 will be a big year for GameStop, as the retailer historically commands a strong share of new console sales. The release of the PlayStation 5 and Xbox Series X--and other next-gen consoles--should help improve business at the retailer, but it remains to be seen how it will all shake out. It was recently reported that the launch supply of the PS5 could be lower than the PS4 from back in 2013.