GameStop fires CFO, announces layoffs as part of aggressive turnaround plan

GameStop has fired its chief financial officer, Mike Recupero, and is making staff cuts across all 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 wasn’t culturally appropriate” and was “too indifferent,” a person familiar with the matter told CNBC. . He was kicked out by GameStop President Ryan Cohen, the person said.

Diana Jajeh, the company’s accounting director, will become chief financial officer. She will receive an annual starting salary of $200,000, according to a filing with the U.S. 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, relate to the corporate side of the business rather than its stores, according to the person familiar with the matter, and are intended to “reduce bloat” as GameStop invests. in other areas.

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

The company has hired more than 600 companies since the start of 2021, according to the memo announcing the changes.

GameStop shares have also garnered increased attention, frequently being swept up in the meme stock frenzy and showing wild swings in their stock price.

Still, the retailer held its cards close to the vest. He provided few updates on broader corporate strategy and did not respond to analyst questions on the company’s earnings calls for more than a year. He did not respond to a CNBC request for details on Thursday’s announcement.

Furlong highlighted some steps GameStop has taken to refresh its brand and drive growth during an earnings call this spring. He said he launched a revamped app, brought new members into his rewards program, and hired people with e-commerce and blockchain backgrounds. It 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 said the company needs to take bold steps as it invests in its digital future.

“That means eliminating excess costs and operating with an intense owner mentality,” he said. “Everyone in the organization needs to become even more active and take on an increased level of accountability for results.”

Shares of the company fell more than 6% in extended trading after gaining more than 15% in 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 bring their price within reach. more investors. The news sent the stock price up more than 8%.

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

All,

Change will be a constant as we scale our 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 to achieve sustained profitability. This means eliminating excess costs and operating with an intense owner mentality. Everyone in the organization needs to become even more active and take on an increased level of accountability for results.

That said, I’m reaching out to you today to share three organizational updates:

1. Having hired over 600 companies in 2021 and the first half of 2022, we have a better understanding of our transformation needs. This allowed us to adjust our workforce in several departments of the company. Today we’re making a number of reductions to help us keep things simple and run nimble with the right talent in place.

2. We will invest significantly in our store managers and field staff, who play a vital role in meeting the needs of our customers. These people are, in many ways, the heart of GameStop. We will share details regarding this investment in the coming weeks.

3. Mike Recupero, who held the position of Chief Financial Officer since last June, is leaving us. Diana Jajeh, who has been our accounting director and has a strong institutional knowledge of the business, has been appointed chief financial officer.

These changes will allow us to operate profitably as we execute our strategy of continuing to grow sales in our commerce business and launch new products that empower customers in the digital asset and web3 gaming verticals. I trust the team we have in place moving forward, and thank you once again for your continued dedication and focus.

Cheers,
Mast

Lance B. Holton