Key Points

  • GameStop, known for its volatile meme stock history, is taking drastic cost-cutting measures despite holding $1 billion in cash reserves.
  • Employees are required to replace warrantied products with used ones, a significant shift in the company's policies.
  • GameStop's employee benefits are being slashed, with increased healthcare costs and the elimination of various crucial benefits.
  • The company's CEO, Ryan Cohen, has faced internal criticism for his extensive restructuring and cost-cutting measures.
  • These changes reflect GameStop's ongoing struggle to adapt in a rapidly evolving retail landscape and appease its investors.

In an attempt to cut costs despite holding $1 billion in cash reserves, GameStop is making major changes that have rattled its employees. The gaming retailer, infamous for its rollercoaster ride fueled by meme stock speculation, has announced plans to reduce employee benefits, putting the future of its Pro membership program at risk. Moreover, staff reports indicate that the company now mandates the replacement of new warrantied products with used ones.

Big changes spark outrage

GameStop has been tracking employees' efforts to sell warranties on a wide range of products, from video game discs to high-value gaming consoles. While the company's warranty terms state its "sole discretion" over replacements being new, used, or refurbished, new policies are compelling staff to offer used replacements only. Customers who request new replacements may be directed to other stores if used ones are out of stock.

Employee benefits

Employee benefits are also taking a hit. GameStop recently informed its staff that healthcare costs would increase in 2024, and several key benefits, including basic life insurance, accidental death and dismemberment coverage, short and long-term disability benefits, and matching 401k contributions, would be eliminated. Specific details about the extent of health plan cost increases from 2023 are not clear. However, a copy of the new benefits package shows that a $850 deductible plan for a single individual will cost $240 per month, while the family plan will cost $853.

These new cost-cutting measures have reignited internal criticism directed at Ryan Cohen, the entrepreneur who transformed from an online pet food mogul to a central figure in the GameStop saga. Cohen, who joined GameStop's board of directors in 2021 and later appointed himself CEO, has overseen a series of layoffs, executive departures, and c-suite firings. His cost-cutting moves and sharp changes have raised questions about the company's long-term direction.

Cohen recently made headlines by offering every player on the Texas Rangers a $10,000 GameStop gift card after the team's World Series win. However, some are left questioning the timing of such gestures, given the recent cuts in insurance and benefits. The situation reflects GameStop's ongoing struggle to adapt to a rapidly changing retail landscape and to appease its investors.

As GameStop's management attempts to navigate these difficult waters, employees and investors are left to ponder what the future holds for this retail icon in an evolving gaming and retail market.

About GameStop Corp.

  • Ticker GME
  • Exchange NYSE
  • Sector Consumer Cyclical
  • Industry Specialty Retail
  • Shares Outstandng 304,529,984
  • Market Cap $3.17B
  • Description
  • GameStop Corp., a specialty retailer, provides games and entertainment products through its e-commerce properties and various stores in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, virtual reality products, and memory cards; new and pre-...
More about GME