GameStop CFO kicked out as activist investor pushes new strategy

The CFO’s exit on Tuesday is part of GameStop’s larger clean-up effort, people familiar with the matter said. Mr. Cohen, co-founder of online pet food retailer Chewy Inc.,

Last November revealed an almost 10% stake in GameStop through its investment firm RC Ventures LLC. At that time, Mr. Cohen sent a letter to GameStop’s board urging them to conduct a strategic review of the business and reduce its reliance on physical retail, focusing instead on the e-commerce.

Although the company’s market value temporarily rose this year and its stock made substantial gains on Wednesday, the brick-and-mortar retailer’s business did not change as drastically. Revenues have been declining in the chain by about 5,000 stores for several years. It faces the same fundamental challenge that booksellers and music retailers before it: a shift from physical copies to digital downloads. The company also faced growing competition from Walmart Inc.

and Amazon.com Inc.

and experienced high leadership turnover.

Mr. Cohen has since lobbied for several changes at the video game retailer.

In January, GameStop said it had made a deal for Mr. Cohen, former Chewy COO Alan Attal and former Chewy CFO Jim Grube to join its board. RC Ventures has agreed to increase its stake to a maximum of 19.9% ​​for several months.

GameStop also made several key appointments to drive the company’s overhaul. The company announced earlier this month that it had hired Matt Francis, a former Amazon.com Inc. executive, who took on the newly created role of CTO on February 15. She also recruited Josh Krueger – who previously worked at Amazon and Walmart. —As vice-president of production. Kelli Durkin, who served as Vice President of Customer Service at Chewy, is GameStop’s new Senior Vice President of Customer Service.

Mr Cohen said he plans to modernize the company with a greater focus on e-commerce and opportunities in tech-driven fields such as e-sports and mobile games, according to a November filing with the Securities. and Exchange Commission. He also wants GameStop to end leases on underperforming stores and shut down non-core operations in Europe and Australia to pay for technology upgrades. The company currently operates in 10 countries.

Wall Street is yet to bet on a potential turnaround at GameStop. The company, especially Mr. Cohen, needs to develop a growth strategy and use it to re-engage institutional investors, many of whom have bypassed the stock, said Michael Pachter, research analyst at the financial services firm. Wedbush Securities Inc. “It’s a real challenge,” Mr. Pachter said. “But if Ryan Cohen starts to show that it’s a growth story, then the institutions will come back, the stock will work and everything. the world will make money. “

Industry analysts see numerous lucrative revenue options for GameStop, including leveraging its brand recognition and reach within the gaming community.

GameStop should focus on its community and encourage people to come to its stores, said Ray Wang, analyst at consulting firm Constellation Research Inc. “To do the whole Blockbuster-to-Netflix thing, you have to bring that community back to GameStop. , from where they went to other social media sites, ”Wang said.

GameStop said it has launched its search for a new CFO and plans to appoint its CFO Diana Jajeh as interim CFO if it hasn’t found a replacement when Mr Bell leaves. The company is looking for a CFO with an e-commerce or technology background who could develop strategies in areas such as capital allocation and financing, people familiar with the matter said.

—Miriam Gottfried, John McCormick, Angus Loten and Sarah Needleman contributed to this article.

Write to Nina Trentmann at [email protected] and Mark Maurer at [email protected]