Gamestop Cutting Pay as It Plans Store Reopenings
Pay cuts are coming for some GameStop employees as the retailer begins the process of re-opening some stores that were closed due to the COVID-19 pandemic.
While around one-third of U.S. stores locations remain closed, two-thirds of stores are closed to customers, but available for curbside pickup.
“By using our omnichannel buy-online-pickup-in-store (BOPIS) 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,” said CEO George Sherman in a statement. “Importantly, since we closed stores to the public on March 22, 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.
Still, GameStop is moving to reopen stores in South Carolina and Georgia, as well as in Italy, Germany, Austria and potentially other operating countries and states in the coming weeks.
As it moves to reopen shop, “certain” employees across the company’s worldwide operating units will receive temporarily reduced pay cuts between 10%-30% starting April 26, it announced. Some corporate support staff were offered the option to either a temporary furlough or reduced workweek/reduced pay program.
Additionally, Sherman will take a temporary base salary reduction of 50%, while CFO Jim Bell and the remainder of the executive leadership team will see salaries cut by 30%. The board of directors has temporarily reduced cash compensation to directors by 50%.
“We continue to proactively manage our business with a goal to increase financial flexibility and preserve cash flow in the current environment,” said Sherman. “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. In addition, we have offered certain corporate and other support team members the option to work under either half-time/half-pay structure or a temporary furlough program. 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.”
The retailer’s comparable store sales dipped 23% for the nine-week period ended April 4, 2020, on a year-over-year basis, which includes the impact of the majority of stores closed in most operating countries throughout the fiscal month of March. In the fiscal March period ended March 21, 2020, the date when the company closed its stores to customer access, comparable U.S. store sales grew approximately 3% as the company experienced a surge in demand across products that people need to work, learn or play from home.