The CFO was forced to step down from his role as activist investor Ryan Cohen driving a digital transformation of the struggling video game retailer, people familiar with the matter said.
The Grapevine, Texas-based company announced Tuesday that CFO Jim Bell will leave the business on March 26, but did not give a reason. His departure is unrelated to the Reddit-fueled stock frenzy, these people said. Bell did not immediately respond to a request for comment.
The CFO’s departure Tuesday is one element of the broader cleanup effort at GameStop, people familiar with the matter said. Mr. Cohen, co-founder of online pet food retailer Chewy Inc.,
last November it revealed a nearly 10% stake in GameStop through its investment firm RC Ventures LLC. At the time, Cohen sent a letter to GameStop’s board of directors urging it to conduct a strategic review of the business and reduce its reliance on physical retail, focusing instead on e-commerce.
Although the company’s market value temporarily skyrocketed this year, and its shares made substantial gains on Wednesday, the brick-and-mortar retailer’s business has not changed as dramatically. Revenues have been declining in the chain of approximately 5,000 stores for several years. It faces the same fundamental challenge as previous music booksellers and retailers: a shift from physical copies to digital downloads. The company has also faced increasing competition from Walmart. Inc.
and Amazon.com Inc.
and experienced high turnover of executives.
Since then, Cohen has pushed through several changes at the video game retailer.
In January, GameStop said it had reached an agreement for Mr. Cohen, former Chewy COO Alan Attal, and former Chewy CFO Jim Grube to join its board. RC Ventures agreed to increase its stake to no more than 19.9% for several months.
GameStop also made several key appointments to drive the business review. Earlier this month, the company announced that it hired Matt Francis, a former Amazon.com Inc. executive, who assumed the newly created position of chief technology officer on February 15. He 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 at Chewy, is the new Senior Vice President of Customer Service for GameStop.
Cohen has said he plans to modernize the company by focusing more on e-commerce and opportunities in technology-driven areas such as e-sports and mobile games, according to a November filing with the Securities and Exchange Commission. He also wants GameStop to end leases at underperforming stores and shut down non-essential operations in Europe and Australia to pay for technology upgrades. Currently, the company operates in 10 countries.
Wall Street is not yet betting on a potential turnaround at GameStop. The company, particularly Mr. Cohen, needs to develop a growth strategy and use it to re-engage institutional investors, many of whom have shorted the stock, said Michael Pachter, a research analyst at the services firm. Financial Wedbush Securities Inc. “That’s a real challenge,” Pachter said. “But if Ryan Cohen starts to show they are 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 leveraging its brand recognition and reach within the gaming community.
GameStop needs to focus on its community and encourage people to come into its stores, said Ray Wang, an analyst at consulting firm Constellation Research Inc. “To bring the whole Blockbuster thing to Netflix, you have to bring that community back to GameStop from where they have gone to other social networking sites, “said Wang.
GameStop said it has launched its search for a new CFO and plans to appoint its chief accounting officer Diana Jajeh as interim CFO if it hasn’t found a replacement when Bell leaves. The company is looking for a CFO with e-commerce or technology experience 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.
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