NEW YORK (BLOOMBERG, REUTERS) – GameStop has fired chief financial officer Mike Recupero and is cutting jobs in a bid to turn around a business buffeted by shifting gaming demands and market malaise.
Its shares on Thursday (July 7) tumbled more than 5 per cent in extended trading on the news.
Current chief accounting officer Diana Jajeh will replace Mr Recupero, effective immediately, GameStop said on Thursday in a securities filing.
The struggling video game retailer is making a “number of reductions” to staff, according to a company memo reviewed by Bloomberg and initially reported by Axios. The cuts will be felt across the parent company and Game Informer, an online magazine.
Along with AMC Entertainment Holdings, GameStop was at the heart of a meme-stock trading craze in 2021, when retail investors banded together on social media forums to punish hedge funds that had bet against the stocks.
However, GameStop and other retail darlings fell out of favor as interest waned amid a market sell-off on recession fears. Up to Wednesday’s close, the company’s shares were down about 21 per cent this year.
Mr Ryan Cohen, who joined the board and became chairman last year, has been trying to revive growth, which has slowed as gamers shifted from buying game discs to digital downloads.
“After making more than 600 corporate hires in 2021 and the first half of 2022, we have a stronger understanding of our transformation needs,” GameStop chief executive officer Matt Furlong wrote in the memo. “This has positioned us to right-size headcount across several corporate departments.”
The beleaguered company is also coming to grips with a clash about strategy between recent hires, many from e-commerce giant Amazon.com, and GameStop staff with a background in bricks-and-mortar game sales.
Mr Recupero was fired because he was not hands-on enough and treated GameStop as if it were Amazon, a person with knowledge of the matter said.
“Everyone in the organization must become even more hands-on and embrace a heightened level of accountability for results,” Mr Furlong wrote in the memo.
Another big challenge on the horizon: a push into digital assets.
In June, the company launched a digital asset wallet that will allow gamers to store, send and receive cryptocurrencies and non-fungible tokens (NFTs) without leaving their Web browser. The wallet will be used in GameStop’s new NFT marketplace, expected to launch in the current quarter, amid a major downtown in the crypto industry.
Analysts are not fully convinced that the company, which has struggled to transition from a bricks-and-mortar game retail store, will become a leader in the NFT market. The recent sell-off in cryptocurrencies has not helped the picture for GameStop’s new initiatives.