Ryan Cohen from an appearance on CNBC.
CNBC
GameStop fired its CEO Matthew Furlong and appointed its board chairman Ryan Cohen as executive chairman effective immediately, the company said Wednesday.Â
Shares of GameStop dropped greater than 20% in prolonged trading after the video game retailer announced the termination. It released the news on the identical day it reported its revenue dropped and its loss narrowed in its fiscal first quarter in comparison with the year-ago period.
The corporate didn’t provide a reason for the firing but noted the change in its quarterly securities filing.
“We consider the mixture of those efforts to stabilize and optimize our core business and achieve sustained profitability while also specializing in capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders,” the filing states.
Cohen took a stake in GameStop in 2020, and in January 2021 he and two other former Chewy executives were named to the retailer’s board as a part of an agreement with the corporate’s management. His investment firm, RC Ventures, currently has an 11.9% stake in GameStop, in accordance with filings.
In a separate securities filing, GameStop disclosed Furlong was fired on Monday and said he will likely be permitted to receive payments and advantages “related to a termination without cause.” Furlong also resigned from the corporate’s board on the identical day, which reduced it to only five members.
The filing noted Cohen will likely be in control of capital allocation, evaluating potential investments and acquisitions and overseeing the managers of GameStop’s holdings.
In a cryptic tweet posted a couple of half an hour after Furlong’s firing was announced, Cohen wrote: “Not for long.”
The activist investor and Chewy founder is thought for saying little or no publicly and making vague statements online.
The choice to part ways with Furlong comes just months after GameStop reported its first quarterly profit in two years while he was on the helm.
A GameStop store operates in a strip mall on March 16, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
As a part of the leadership shuffle, Alan Attal, a former Chewy executive and a current member of GameStop’s board, was named lead independent director of the board, the filing said.
Mark Robinson, GameStop’s general counsel, was named the retailer’s general manager and principal executive officer. His duties will include “administrative matters, corporate development, legal affairs and support for GameStop’s holdings, including the oversight of other executive officers besides [Cohen],” in accordance with the filing.
Robinson will report on to Cohen and can proceed to function general counsel and secretary of GameStop.
Furlong was appointed as GameStop’s CEO in June 2021 when the corporate was within the early stages of a turnaround plan. The previous Amazon executive was appointed as GameStop was transitioning from a longtime brick-and-mortar retailer to an internet player with the flexibility to compete with rivals like Walmart, Sony and Microsoft.Â
Prior to his tenure as GameStop’s CEO, which lasted about two years, Furlong spent nearly nine years at Amazon, most recently leading the expansion of its Australia business. Prior to that, he served as a technical advisor to the top of Amazon’s North America consumer business and worked for Procter & Gamble.
Furlong couldn’t immediately be reached for comment.
The announcement coincided with GameStop’s fiscal first quarter earnings release. Within the three months that ended April 29, GameStop reported revenue of $1.24 billion, down from $1.38 billion within the year-ago period. Its net loss narrowed to $50.5 million, or 17 cents per share, from $157.9 million, or 52 cents a share, a yr earlier.
Sales in United States, Canada and Australia dropped by 16.4%, 18.5% and eight.9%, respectively, in comparison with the year-earlier period, while sales in Europe increased 26.2% yr over yr, in accordance with GameStop’s quarterly filing.
The corporate attributed the drop in sales to currency fluctuations, fewer significant gaming title launches and soft sales in pre-owned software and hardware and collectibles. Within the collectibles category, where GameStop has the flexibility to drive long-term growth, sales dropped to $173 million, in comparison with $220.9 million within the year-ago period.
The corporate incurred $14.5 million in transition costs related to its restructuring efforts in Europe. It noted it’ll take more transition charges in the present quarter.
GameStop has improved its margins by dramatically slashing costs. Selling, general and administrative expenses got here in at $345.7 million for the quarter, down from $452.2 million within the year-ago period.
In a news release, the corporate said it could not hold a conference call to debate the quarter’s earnings.
Read the complete earnings release here.
