GameStop made money in the last quarter of 2022, something it hasn’t done in years. The surprising financial results were posted Wednesday, with the company reporting $48.2 million in profit. GameStop lost $147.5 million during the same period last year, for reference — but, ironically, made more sales during that time. How did GameStop make money this quarter even with less sales? The company has drastically cut costs, sometimes at the detriment to its workers, GameStop staff told Polygon.
“GameStop is a much healthier business today than it was in the start of 2021,” CEO Matt Furlong, who made nearly $17 million (roughy 1⁄3 of Q4’s 2022 profit) in 2021. The shocking profit report caused GameStop stocks to jump 35% on Wednesday.
Furlong credited GameStop’s profitability to its growing collectibles business alongside improvements to its online storefront and shipping capabilities. But the profit is more likely tied to GameStop’s massive drop in operating costs due to layoffs, store closures, and reduced hours for employees.
“This pivot obviously included headcount reductions as we streamlined operations and cultivated a fast-paced, intense operating environment gearing toward cost containment, efficiency, and profitability,” Furlong said. Furlong expects to continue to “aggressively cut costs” into 2023 and beyond.
GameStop plans to cut costs in Europe; Furlong said the company has already started to “wind down” business in some countries. One of those countries appears to be Ireland, where GameStop is pulling gift cards, trade-ins, and other services, it announced on its website. GameStop stores in Ireland won’t take pre-orders anymore either, and the company is asking customers to use gift cards and store credit “as soon as possible,” and to get refunds for items that were pre-ordered. As of 2021, Irish GameStop stores employed around 200 people as stores continued to close.
Workers told Polygon in February that one of the cost-cutting measures is forcing stores into single coverage — meaning one person working at a store at a time. It’s created an environment that people call “dangerous” and exhausting; not only is there an increased risk for robberies, but GameStop employees report being unable to step away for breaks and struggling to manage customers in-store and answer phone calls. Workers are worn down by consistently demoralizing corporate decision-making, they said.
GameStop may have been profitable last quarter, but there’s a limit for how much cost-cutting the company’s employees will endure.
Update: This story has been updated to include information about GameStop’s partial exit from European markets.