With sales down 23% annually and most of its nationwide stores closed because of the coronavirus pandemic, GameStop is cutting executive and employee pay. The pay cuts were announced via a company statement on Thursday.
The video game retailer has temporarily reduced base pay for Chief Executive George Sherman and its board of directors by 50% in an attempt to mitigate losses brought on by COVID. Chief Financial Officer Jim Bell will also receive a 30% pay cut.
The company said that some employees across the globe will also experience wage reductions between 10% and 30% beginning April 26.
“Today, we announced salary reductions for our senior management team and board of directors, as well as wage rate reductions for some other corporate and field support staff,” Sherman said in the statement.
Sherman also said that some employees were asked to work either half-time of for reduced pay, or temporarily furloughed. GameStop would not clarify how many employees have been affected by these pay cuts in total but called the situation “temporary.”
“We believe our aggressive focus on expense, inventory and capital expenditure reductions will help preserve our financial health as we work to ensure readiness and ramp up operations as soon as conditions allow,” said Sherman.
The gaming retailer’s store sales over nine weeks ended April 4 declined 23% annually, due mostly to widespread store closures.
GameStop also said it is having trouble paying rent and looking to re-open some stores as soon as possible — it closed the majority of them March 31 after failing to convince local governments its gaming products are “essential retail.”
The company said it is in talks with some landlords regarding potential abatement or deferral of rent payments on GameStop stores. GameStop stated it “did not make a portion of certain lease payments” since the pandemic began, “due to the impact of governmental regulations and certain landlord decisions to close properties.”
Right now two-thirds of GameStop’s stores in the United States are open for curbside pickup, and one-third remain completely operational. GameStop said it’s already begun the process of reopening stores in Georgia, South Carolina, Austria, Germany and Italy. Sherman said GameStop expects “the potential to re-open” in other states and countries in the coming weeks, though there remains no vaccine or clear end to the pandemic in sight.
“We believe our aggressive focus on expense, inventory and capital expenditure reductions will help preserve our financial health as we work to ensure readiness and ramp up operations as soon as conditions allow,” Sherman added in a statement.
The retailer’s finances have been in dire straits for a short while now. In September, GameStop announced it would close 200 “under-performing” stores across the country. Its most recent third-quarter earnings report issued in December, GameStop noted a 25.7% decrease in its global sales and an adjusted net loss of $83.4 million.