GameStop Corp. sacked Mike Recupero, its Chief Financial Officer, and is laying off people to turn around a business influenced by market malaise and shifting gaming demands.
What’s More?
In a securities filing on Thursday, GameStop informed that its Chief Accounting Officer Diana Jajeh would replace Recupero with immediate effect. Recupero will not get any severance payment other than what was given in his offer letter by the company.
As per the company memo by Bloomberg, several employees are being laid off by the struggling video games retailer. The cuts will be across the parent organization and Game Informer’s online magazine.
The new Chairman, Ryan Cohen, who joined the board last year, has been trying to revive the beleaguered company as a gamer shift from buying physical game discs to digital downloads. The company was symbolic of the pandemic-driven meme stocks when retail traders hiked prices of certain company games prompted by social media chatters rather than the companies’ fundamentals.
CEO Matt Furlong, in a memo, said that the company, after making 600 hirings in 2021 and the first half of 2022 has better understood the transformation needs and is positioned to have the right sized headcounts across several departments.
The company had to deal with the clash of strategies adopted by the recent hires from e-commerce companies like Amazon.com and the GameStop employees from a bricks-and-mortar games sales background.
Recently, the company hired several employees from Amazon to shift focus from physical store outlets to the e-commerce platform. Today 90% of the new console games are available exclusively from digital downloads, according to Ars Technica. The CEO, CFO, and Chief Growth Officer all had joined Amazon after long stints there. Chairman Cohen founded Chewy.com, a leader in the Pet-c-commerce world.
Still, GameStop operated 4573 stores until January, 243 less than the previous year. The skills from e-commerce did not translate easily into bricks-and-mortar business, leading to confusion and uncertainty.
Online sales executives are not compatible with retail operating stores. A person who knew the matter said that Recupero was not hands-on and treated GameStop as if it were Amazon.
Another challenge on the horizon is to push for digital assets. GameStop launched a digital asset wallet that allowed gamers to deal in cryptos and non-fungible tokens. The wallet will be used in GameStop’s launch of its NFT marketplace in the current quarter.
Analysts are not convinced that the company will struggle with its present business transition and will become a leader in the NFT market. The recent slide in Cryptocurrencies is not a perfect picture for the new initiative by the company.
GameStop’s share price tumbled to a low of $120.61 and recovered to close at $135.12 after the company announced a 4:1 stock split.
