• WDRB reports that hundreds of GameStop (GME) employees may soon be laid off.
• The company announced four rounds of layoffs last year.

Shares of GameStop are in full focus following what appears to be another round of layoffs for the video-game retailer. According to Kentucky local news station WDRB, the company is in the process of closing down its Shepherdsville, Kentucky, distribution center, which will likely result in the loss of hundreds of jobs. The center first opened in 2016 and initially employed 400 associates. It operated as a place for packing and shipping physical video games and repairing electronic devices.

The center will close its doors on June 30, with layoffs beginning on March 18. In an internal letter to employees dated Jan. 17, the company explained, “The entire facility will be closed and all employees at the facility will be impacted.”

A commercial real estate listing with the address of the center confirms this. The center will be available for a new occupant beginning on July 1.

What These GameStop Layoffs Mean

Layoffs can be seen as both positive and negative for a company. The short-term effect is that it will result in fewer general and administrative costs due to the reduction of employees. This could help improve a company’s bottom-line income. The long-term effect is that fewer employees may stifle future growth and innovation.

GameStop will still operate several other distribution centers following the closure of its Kentucky facility. For example, it has a warehouse in York, Pennsylvania, and also a distribution facility in Reno, Nevada.

GameStop isn’t the only company in the video-game industry dealing with layoffs. Earlier this week, software development company Unity Software (NYSE:U) announced that it would be laying off 284 employees. Unity had over 8,000 employees before the reductions were announced.

If confirmed, GameStop’s layoffs will be the fifth round since 2022. CEO Matt Furlong attributed the reductions to high inflation, low consumer sentiment and profitability goals.

Meanwhile, analysts appear to be shaky on GameStop’s long-term prospects. The most recent price target update is attributed to Wedbush analyst Michael Pachter, who lowered his price target to $5.30 from $6 after reviewing the company’s third-quarter earnings. For the quarter, revenue tallied in at $1.19 billion, down 8% year-over-year and missing the analyst estimate for $1.35 billion.