Brick-and-mortar retailer GameStop (NYSE: GME) announced it has dismissed its CFO, Mike Recupero, just a year after he joined the company.
What Happened?
According to a memo sent to GameStop employees, Recupero’s employment was terminated because he wasn’t “the right culture fit.” The report says he was pushed out of the company by activist investor and GameStop chairman, Ryan Cohen.
Recupero’s dismissal comes as a part of a broader turnaround plan for GameStop as the company looks to invest in other areas and reduce the gap with its video gaming competitors.
“We’re going to be making a significant investment in our Store Leaders and field employees, who play a critical role in fulfilling the needs of our customers. These individuals are, in many respects, the heart of GameStop. We’ll be sharing details regarding this investment in the coming weeks,” the company wrote in the memo.
Recupero will be replaced by Diana Jajeh, who currently serves as GameStop’s chief accounting officer. Jajeh, the retailer’s new CFO, will earn $200,000 annually, according to the company’s filing with the U.S. Securities and Exchange Commission (SEC). On top of that, she will also be eligible for a “transformation bonus” of a total of $1,965,000.
The report says that the turnaround plan and the layoffs will affect the corporate side of the retailer and not its store employees as GameStop looks to “reduce bloat” and catch up to leaders in the video game industry which have mainly moved online.
Activist investor and founder of Chewy, Ryan Cohen, was selected last year to lead the turnaround, after which he has hired several new executives and corporate leaders at GameStop, including Chief Executive Matt Furlong and Recupero, who will now be leaving the company.
The memo said GameStop hired over 600 corporate employees since the start of 2021 when its share price skyrocketed amid a meme-stock frenzy. However, the company has been sharing very few details about its broader corporate strategy and has not responded to analysts’ questions during earnings calls for more than a year.
Still, Furlong pointed out certain steps the retailer has adopted to revitalize its brand and spur growth on the previous earnings call. The CEO said GameStop has rolled out a redesigned app and lured new members to its rewards program as well as made fresh hires, focusing on those with experience in blockchain gaming and e-commerce.
“It is important to stress the GameStop had become such a cyclical business and so capital-starved that we have had to rebuild it from within,” he said. “We’ve also had to change the way we assess revenue opportunities by starting to embrace, rather than run from, the new frontiers of gaming.”
Gains From Earlier This Week Almost Erased
The company’s shares soared over 8% Wednesday after GME said its board has given a green light to the 4-for-1 stock split.
This means that investors who own GME shares at the market’s close on July 18 will receive a dividend of an additional three shares for each of the retailer’s Class A common stock. The company will distribute the dividends after the close of the market on July 21 and split-adjusted GME shares will start trading the next day.
A stock split is a common strategy used by companies who want to increase the number of their shares to make them more affordable to investors.
The retailer also plans to launch a non-fungible token (NFT) marketplace by the end of Q2.
Conclusion
GameStop stock is down Friday after the company announced it fired its CFO. Moreover, GameStop is planning layoffs as it attempts to slash costs. Shares of GameStop had closed at $135.12 on Thursday before returning to trade below $130 on Friday.
