GameStop Plans 400 New Stores

Published on March 18, 2010 | Comments: 0
Video game/entertainment software retailer GameStop Corp. intends to spend $75 million on opening 400 new stores this year. GameStop will also spend $125 million in store improvements, information system support, refurbishment upgrades, distribution expansion and loyalty program enhancements, and reserve another $100 million for acquisitions and investments. GameStop is planning to expand its store base following total sales growth during fiscal 2009. Annual total sales grew 3.1%, from $8.81 billion to $9.08 billion. The retailer is forecasting total sales growth of 4-6% during fiscal 2010, with improvements in new software, used and other products offsetting losses in new hardware. However, GameStop reported a 7.9% drop in comparable store sales growth for fiscal 2009, which may explain why the retailer sees aggressively expanding its store footprint as a key to continued sales growth. GameStop is predicting flat to 2% comparable store sales growth in fiscal 2010.

GameStop Goes Digital

In addition to expanding its brick-and-mortar channel, GameStop is also likely preparing for growth of its nascent digital download channel. In November 2009, GameStop appointed Shawn D. Freeman to the newly created position of SVP and GM of Digital Business.

Competitors Close Stores

GameStop plans to open stores as at least two major brick-and-mortar competitors shutter stores in the face of poor financial performance. Media entertainment retailer Blockbuster, which includes a substantial video game selection in its assortment, admitted this month it is at risk for filing Chapter 11 bankruptcy. Blockbuster reported a $558.2 million net loss in fiscal 2009 and also closed 374 stores last year. In addition, Movie Gallery, parent company of the Game Crazy video game chain, voluntarily filed for Chapter 11 bankruptcy reorganization in February 2010. Movie Gallery closed about 760 U.S. stores across three banners, including Game Crazy, as part of the filing, leaving about 250 Game Crazy stores open. Movie Gallery also closed about 250 Game Crazy locations across the U.S. in 2009. GameStop operates more than 6,200 stores worldwide and an e-commerce site.

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