GameStop CFO was forced to leave while activist investor launches new strategy

The CFO’s departure on Tuesday is an element of GameStop’s broader cleaning effort, people familiar with the matter said. Mr. Cohen, the co-founder of online pet food retailer Chewy Inc.,

Last November, it disclosed 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 it to conduct a strategic review of the business and reduce its reliance on physical retail, focusing on e-commerce.

While the company’s market value has temporarily inflated this year and its shares made substantial gains on Wednesday, the traditional retailer’s business has not changed as dramatically. Revenue has been declining in the chain of about 5,000 stores for several years. He faces the same fundamental challenge as booksellers and music retailers before him: a shift from physical copies to digital downloads. The company also faced increasing competition from Walmart Inc.

and Amazon.com Inc.

and high turnover of experienced executives.

Since then, Cohen has pushed for several changes at the video game retailer.

In January, GameStop said it had reached an agreement for Cohen, former Chewy chief operating officer, Alan Attal, and former Chewy CFO, Jim Grube, to join the board. RC Ventures agreed to increase its stake to no more than 19.9% ​​for several months.

GameStop also made several important appointments to drive the business overhaul. The company announced earlier this month that it hired Matt Francis, a former executive at Amazon.com Inc., who assumed the newly created role of chief technology officer on February 15. She also recruited Josh Krueger – who previously worked at Amazon and Walmart – as vice president of compliance. Kelli Durkin, who served as vice president of customer service for Chewy, is GameStop’s new senior vice president of customer service.

Cohen said he plans to modernize the company by focusing more on e-commerce and opportunities in technology-oriented areas, such as electronic sports and mobile games, according to a document filed in November with the Securities and Exchange Commission. He also wants GameStop to end rents at underperforming stores and close non-essential operations in Europe and Australia to pay for technological improvements. The company currently operates in 10 countries.

A possible GameStop turnaround is not something Wall Street is still betting on. The company, especially Cohen, needs to develop a growth strategy and use it to reengage institutional investors, many of whom have shorted shares, said Michael Pachter, research analyst at financial services firm Wedbush Securities Inc. This is a real challenge. ”Said Pachter. “But if Ryan Cohen starts showing that it’s a growth story, institutions will come back, stocks will work and everyone will make money.”

Industry analysts see many lucrative revenue options for GameStop, including brand awareness and reach in the gaming community.

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

GameStop said it launched its search for a new CFO and plans to appoint its chief accounting officer Diana Jajeh as interim chief of finance if it does not find a replacement when Bell leaves. The company is looking for a CFO with experience in e-commerce or technology who can 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]