Dive Brief:

• GameStop is laying off more than 50 management-level employees as part of a cost-cutting measure, according to an internal email that surfaced on Twitter and was reported on by gaming news site DualShockers.
• Affected staff include leaders in regional and district positions, as well as HR and loss prevention. The company did not immediately reply to Retail Dive's request for comment. The company has indicated previously that it is reviewing costs in hopes of adding $100 million to its operating profit.
• The cuts come as GameStop expands its regions and districts, reducing the number of required managers, in an effort to "reduce our cost structure and build efficiencies into our field leadership organization so that we can reinvest in the business," the company said in the leaked email.

Dive Insight:

GameStop faces increasing pressure to engineer a turnaround after the gaming retailer's sales have fallen by nearly $1 billion over the last five years and its profits turned negative last year. 

Like other media retailers, GameStop is looking for ways to reinvent itself as its chosen product sells more online and becomes digitized and streamable.

Over the past few years the retailer has been closing stores and, more recently, brought in a new CEO as well as new chief customer and chief merchandising officers. But GameStop still appears far off from the goal, with the year off to a rough start. First quarter sales fell 13.3% year over year and comparable sales dropped 10.3%.

Jeffries analysts said at the time that "patience is thin" among investors, and so what comes next "needs to be big." More specifically they noted lags in assessment, plan development and execution in GameStop's turnaround efforts. "[I]n our view, [GameStop] now faces the need for a dramatic pivot, wholesale changes, and aggressive action to remain relevant."

GameStop also still has 3,846 stores in the U.S. that it must somehow make productive as gamers turn more and more to streaming. But new CEO George Sherman has told his team that "we don't have a real estate problem," according to a Seeking Alpha transcript of a June analyst call.

"We have a merchandise allocation opportunity that we need to address in a big way," he went on. "This can be done with existing resources of very minimal investment, and we'll go a long way improving the customer experience." Specifically, Sherman said the company is focused on driving accessories, software and hardware as the current console cycle ends.