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. Europe, in particular, is one market where GameStop plans to cut costs; Furlong said the company has already started to “wind down” business in some countries.
Workers told Polygon in February that one of these 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 Game Stop 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.