CFO has been forced out of his role as an activist investor
is pushing for a digital transformation of the ailing video game dealer, said those familiar with the matter.
The Grapevine, Texas based company announced the chief financial officer on Tuesday
I will be leaving the store on March 26th but haven’t given a reason. His exit has nothing to do with the Reddit madness for the stock, these people said. Mr Bell did not immediately respond to a request for comment.
The CFO’s exit on Tuesday is one element of GameStop’s broader cleanup, according to those familiar with the matter. Mr. Cohen, co-founder of the online pet food retailer
Last November, he announced an almost 10% stake in GameStop through his investment firm RC Ventures LLC. At this point, Mr. Cohen sent a letter to GameStop’s board asking him to conduct a strategic review of the business and reduce his reliance on physical retail, focusing instead on e-commerce.
The Morning Ledger provides daily news and corporate finance insights from the CFO Journal team.
Although the company’s market value has risen temporarily this year and the stock made significant gains on Wednesday, the brick and mortar retailer’s business hasn’t changed as dramatically. In the approximately 5,000 chain of branches, sales have been shrinking for several years. It faces the same fundamental challenge as booksellers and music retailers: a shift from physical copies to digital downloads. The company also has growing competition from
and experienced a high turnover of executives.
In January GameStop announced an agreement had been reached on Mr. Cohen, Chewy’s former chief operating officer
and former Chewy CFO
Join its board of directors. RC Ventures agreed to increase its stake to no more than 19.9% for several months.
GameStop has also set several key dates to help drive the business overhaul. The company announced earlier this month that it had hired Matt Francis, a former executive director of Amazon.com Inc., to take over the newly created role of chief technology officer on Feb.15. It also recruited Josh Krueger, who had previously worked at Amazon and Walmart – as the Vice President of Fulfillment. Kelli Durkin, who served as Chewy’s vice president of customer service, is GameStop’s new senior vice president of customer care.
According to a notification filed with the Securities and Exchange Commission in November, Cohen plans to modernize the company by adding focuses more on e-commerce and opportunities in technology-driven areas such as esports and mobile gaming. He also wants GameStop to terminate leases in below par stores and close unnecessary stores in Europe and Australia to pay for technology improvements. The company is currently active in 10 countries.
Wall Street is not yet banking on a possible trend reversal at GameStop. The company, Mr. Cohen in particular, needs to develop a growth strategy and use it to re-engage institutional investors, many of whom have cut the stock, said Michael Pachter, research analyst at financial services firm Wedbush Securities Inc. « This is a real challenge. » said Lachter. « But when Ryan Cohen begins to show that this is a growth story, institutions will return, the stock will work, and everyone will make money. »
Industry analysts see many lucrative revenue options in GameStop, including leveraging brand awareness and revenue the reach within the gaming community.
GameStop should focus on its community and encourage people to come to its stores, said Ray Wang, an analyst at consulting firm Constellation Research Inc. « To get the whole blockbuster to – To get the Netflix thing done, you need to bring this community back to GameStop. From there, they went to other social media sites, ”said Wang.
GameStop announced that it has started the search for a new CFO and plans to appoint Chief Accounting Officer Diana Jajeh as Interim Finance Director if the company cannot find a replacement upon his departure. The company is looking for a CFO with an e-commerce or technology background who could strategize in areas such as capital allocation and financing, according to those familiar with the matter. Blockchain technology is likely to have certain traditional financial controls in place and processes change, with a number of new advantages, but also risks to be considered. Those responsible for financial reporting, internal control and auditing should be actively involved in the discussion about blockchain and its implementation.
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