GameStop is laying off workers only a few weeks before the holidays, with a team working on the company’s crypto initiatives reportedly hard hit.
The Grapevine, Texas-based video game retailer wouldn’t confirm the layoffs, but LinkedIn posts from current and former employees indicated that a large number of jobs were cut beginning Monday. The team working on its blockchain wallet was particularly hard hit, according to Axios. A LinkedIn post from a former director on the logistics and transportation team, Mickey Kalish, said the transportation department was “heavily impacted.”
GameStop lead engineer Daniel Williams wrote a post on LinkedIn that simply said: “Another big round of layoffs from GameStop currently in progress ... e-commerce product and engineers ... lots of them.”
On Tuesday, GameStop spokesman Gregory Marose said the company had no comment. The company reports its latest quarterly results after the market closes Wednesday, giving investors their newest glimpse into how a turnaround strategy engineered by activist investor-turned-board chairman Ryan Cohen is progressing.
In an internal email obtained by gaming website Kotaku, GameStop CEO Matt Furlong said the layoffs will help the company reach profitability.
“We’ve recently completed several projects that were part of the initial phase of our transformation and enable the business to operate with increased efficiency,” Furlong wrote. “In addition, we’ve continued to gain clarity regarding the right level of corporate staff needed to achieve our profitability and growth goals.”
GameStop has been working on blockchain technology and a digital marketplace as its searches for ways to connect with gamers who now mostly stream. In September, it became the preferred retail partner for now-bankrupt crypto exchange FTX, which is missing at least $8 billion in customer funds.
The company was put in an unexpected financial position last year when it was at the center of the meme stock craze where traders bid up its stock price to squeeze out investors betting on the company’s demise. By the end of 2021, GameStop had $1.3 billion in cash. That’s down to about $909 million as of September.
GameStop laid off workers in July as part of its shift to a digital future, according to a memo obtained by CNBC. It invested in the nonfungible token and crypto space, as gamers are a natural audience for new technologies. But with crypto prices still down after they crashed a year ago, the company is in a tough position.
The company released its wallet to send and receive crypto and NFTs in May. It was designed to work with its NFT marketplace, which launched in July, just days after it cut jobs and fired its CFO of one month, Mike Recupero, an Amazon veteran. He was replaced by Diana Saadeh-Jajeh, who was previously chief accounting officer at GameStop.
Other leadership changes this year included hiring a new chief operating officer, Nir Patel, who was previously CEO at retailer Belk, and Furlong, the new CEO, who previously worked at Amazon.
In February, GameStop partnered with blockchain platform Immutable X, which was to provide it with up to $150 million in IMX tokens when it hit certain milestones. When the deal was announced, IMX tokens were trading at $3.38. Now, the price has fallen to 48 cents.
Layoffs have been tearing through industries, including tech and media, as recession fears take hold in corporate boardrooms. This week, consumer brands giant PepsiCo cut jobs, including some at its North America snacks and packaged-foods business in Plano, Texas, and Chicago.
