Entertainment & Life

GameStop confirms buyout talks in wake of struggles and a data breach

An employee assists customers shopping for Microsoft Xbox 360 video games inside a GameStop Corp. store in Louisville, Ky., on March 15, 2018. In June 2018, the company confirmed reports that its in talks with third parties for a potential buyout.
An employee assists customers shopping for Microsoft Xbox 360 video games inside a GameStop Corp. store in Louisville, Ky., on March 15, 2018. In June 2018, the company confirmed reports that its in talks with third parties for a potential buyout. Bloomberg photo by Luke Sharrett.

Video game retailer GameStop confirmed Tuesday that it is in discussions with third parties for a potential buyout.

This followed a report from Reuters on Monday that New York-based private equity firm Sycamore Partners and possibly others are interested in the company, though GameStop did not mention any interested parties by name. Sycamore holds investments in retailers like Hot Topic and Staples.

"There can be no assurance any agreement will result from these discussions," the company said in a press release. "GameStop does not intend to make any additional comments regarding these discussions unless and until it is appropriate to do so."

The Texas-based retailer, which operates more than 7,200 stores across 14 countries, faced a data breach in June of last year and closed more than 100 locations. There are approximately 20 GameStop locations in the Sacramento area, including one at Arden Fair Mall and stores in Natomas, West Sacramento and Elk Grove.

Following the report on Monday, shares of the company's stock jumped 13 percent before dropping to a 9 percent increase at the close of the day. As of this report, GameStop's shares are at $15.60, though some of that could be contributed to the Electronic Entertainment Expo (E3), where many new games are announced and become available for pre-order, ending last Thursday.

GameStop has not been a stranger to highs and lows on the stock market this year. Its stock price fell 27 percent by the end of May, according to Market Watch.

GameStop lost its CEO in May when Michael Mauler left the company after just three months in the role. He cited personal reasons for leaving. A former Microsoft executive, who worked with the Xbox brand, Shane Kim became interim CEO in early June, according to Reuters.

On top of struggling to compete with online retailers, GameStop has had to compete with digital game sales, which according to the NPD Group, as reported by VG 24/7, have risen significantly since 2010. That year, digital game sales were estimated at 31 percent of overall game sales. By 2016, an estimated 74 percent of video games were purchased through digital store fronts on consoles and PC gaming clients.

According to the press release, GameStop also owns more than 1,300 Spring Mobile and Simply Mac stores, Game Informer magazine and collectibles retailer ThinkGeek, which GameStop purchased in 2015 when it branched out into physical merchandise, board games and more in an effort to draw customers into its stores, according to Tech Crunch.

  Comments