GameStop fires its CFO and announces layoffs as part of aggressive turnaround plan

GameStop has fired its chief financial officer, Mike Recupero, and is making staff cuts across departments as part of an aggressive turnaround plan, the video game retailer announced Thursday.

Recupero, who joined the company about a year ago, was “fired because he didn’t fit into the right culture” and was “too far removed,” a person familiar with the matter told CNBC. He was ousted by GameStop president Ryan Cohen, the person said.

Diana Jajeh, the company’s chief accounting officer, will become chief financial officer. She will have a starting annual salary of $200,000, according to a filing with the US Securities and Exchange Commission, and will be eligible for a “transformation bonus” totaling $1,965,000.

The layoffs, which were announced in a memo to employees obtained by CNBC, are on the corporate side of the company and not its stores, according to the person familiar with the matter, and are intended to “reduce the bloat” as that GameStop invests. in other areas.

The traditional brick-and-mortar retailer has been trying to reinvent itself and catch up with a video game business that has largely moved online. Chewy founder Cohen was chosen last year to lead the company’s turnaround. He brought in a new slate of corporate leaders, including CEO Matt Furlong and Recupero, formerly of Amazon.

The company has made more than 600 corporate hires since the beginning of 2021, according to the memo announcing the changes.

GameStop stock has also garnered increased attention as it frequently gets swept up in the meme stock frenzy and sees wild swings in its share price.

However, the retailer has kept its cards close to the vest. He has provided few updates on broader corporate strategy and hasn’t answered questions from analysts about the company’s earnings calls for more than a year. He did not respond to a request from CNBC for more details about Thursday’s announcement.

Furlong highlighted some steps GameStop has taken to refresh its brand and drive growth in an earnings call this spring. He said he launched a redesigned app, brought in new members to his rewards program, and hired people with backgrounds in e-commerce and blockchain gaming. He plans to launch a market for non-fungible tokens, or NFTs, by the end of the second quarter.

In the memo sent to employees Thursday and obtained by CNBC, Furlong he said the company has to take bold steps as it invests in its digital future.

“This means cutting out cost overruns and operating with an intense ownership mindset,” he said. “Everyone in the organization needs to be even more hands-on and take a higher level of accountability for results.”

Shares of the company fell more than 6% in extended trading after gaining more than 15% during the regular session. As of Thursday’s close, GameStop shares were trading at $135.12, giving the company a market value of $10.29 billion.

Earlier this week, GameStop said its board had approved a 4-for-1 stock split. A stock split is issued when a company wants to increase the number of shares and make its price available to more investors. The news caused a jump of more than 8% in the share price.

Here’s the full memo sent to GameStop employees on Thursday:

All,

Change will be a constant as we evolve our trading business and launch new products through our blockchain group. After investing heavily in people, technology, inventory, and supply chain infrastructure over the past 18 months, our goal is sustained profitability. This means cutting out cost overruns and operating with an intense owner mindset. Everyone in the organization needs to be even more hands-on and take a higher level of responsibility for results.

With that said, I will be reaching out today to share three organizational updates:

1. After making more than 600 corporate hires in 2021 and the first half of 2022, we have a better understanding of our transformation needs. This has positioned us on the right staff in various corporate departments. Today, we’re making a number of reductions to help us keep things simple and operate agilely with the right talent in place.

2. We will make a significant investment in our store leaders and field employees, who play a critical role in meeting the needs of our customers. These people are, in many ways, the heart of GameStop. We will share details about this investment in the coming weeks.

3. Mike Recupero, who has served as our Chief Financial Officer since last June, is leaving. Diana Jajeh, who has been our Chief Accounting Officer and has a strong institutional understanding of the business, has been appointed Chief Financial Officer.

These changes will allow us to operate profitably as we execute on our strategy of pursuing sales growth in our trading business and launching new products that empower customers within the digital asset and web3 gaming verticals. I am confident in the team we have going forward, and thank you again for your continued dedication and focus.

Cheers,
Mate

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