GameStop is aggressively expanding its warehousing distribution network as the company seeks to transform itself into a full-fledged e-commerce retailer. Only that is clear.
What’s not very clear is what happens in all that space.
In May, GameStop announced that it had leased a 700,000-square-foot fulfillment center in York, Pennsylvania. This month, GameStop announced another lease for 530,000 square feet of space in Reno, Nevada.
Chewy Inc, the newly elected Chairman of the Board of GameStop. Ryan Cohen, co-founder of Grapevine, has taken power in Grapevine-based video game retailers by promising to turn the company into a more powerful online retailer that can compete with something like Amazon.
The company has added more than one million square feet of space to date and may add more in the future.
In a recent announcement, GameStop lacks details about what the center will be used for, other than reducing delivery times to East and West Coast customers.
Analysts and investors have been engulfed in the darkness of how the rest of Cohen’s vision is implemented. For the time being, GameStop leaders have bought the opportunity to prove the company’s vision before it gets the attention of traders, analysts said.
When asked to comment, GameStop pointed out a 2021 proxy solicitation.
Retiring CEO George Sherman told shareholders in an April proxy letter that the company is on its way to becoming a “tech company that is obsessed with customers that please gamers.”
Sherman generally outlined four initiatives the company is working on, including investing in technology, improving customer care, expanding its distribution footprint, and expanding its GameStop product catalog.
“We continue to work to expand the addressable market by expanding GameStop’s product catalog, which includes expanding products across games, collectibles and other natural adjacencies. Includes, “says Filing.
Does the future of GameStop look like a stronger competitor to consumer electronics retailers like Best Buy? Or something else entirely? It’s hard to say until Cohen and management share a plan.
Still, analysts point out that poor performance and lack of communication about plans from GameStop have had little impact on trading activity. GameStop’s share price has been around $ 160 per share this week, up significantly from $ 4, which was trading a year ago.
At WallStreetBets, an anonymous Reddit community that loosely organized trading activities to push GameStop stock to historic highs this year, traders ignore the company’s actual performance and generally refer to the stock market in general. As a “casino” that continues to share memes.
For decades, GameStop’s core business has been selling new and used physical video game discs, consoles, and accessories.
Due to the declining sales of physical video games in recent years, GameStop has expanded into other business areas through acquisitions such as video game merchandiser ThinkGeek.
The fact that this basic business model hasn’t changed dramatically in recent years despite lower earnings has revealed activist investor Cohen’s 12% stake in the company and ambitious goals for 2020. That’s at least part of the reason it sometimes got a lot of attention.
Previously, GameStop’s US fulfillment was managed at two facilities in Grapevine. One is for recycled products and the other is in Shepherdsville, Kentucky. There is a total of over 1 million square feet of space.
Wedbush Securities analyst Michael Prachter likened the fulfillment center leasing to Amazon’s early days when it was strategically expanding its distribution warehouse space across the country.
The company has the potential to further expand its product offering to tangential categories such as PC parts, office supplies and other gaming accessories, he said.
Still, Prachter is skeptical that there is a viable turnaround plan.
“I want to hear what his strategy is,” Prachter said.
Copyright 2021 Tribune Content Agency.
GameStop is robbing Amazon-sized fulfillment centers. What can you sell? | News
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