GameStop shares plunge after big executive shake-up
- GameStop fired CEO Matthew Furlong and appointed Ryan Cohen as executive chairman.
- The company didn't provide a reason for the termination.
- Shares of the video game company dropped more than 20% in premarket trading Thursday.
Shares of GameStop dropped more than 15% Thursday.
The company announced the shake-up just as it reported its revenue dropped and its loss narrowed in its fiscal first quarter compared to the year-ago period.
GameStop didn't provide a reason for the firing but noted the change in its quarterly securities filing.
"We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen's leadership will further unlock long-term value creation for our stockholders," the filing states.
Cohen took a stake in GameStop in 2020, and in January 2021 he and two other former Chewy executives were named to the retailer's board as part of an agreement with the company's management. His investment firm, RC Ventures, currently has an 11.9% stake in GameStop, according to filings.
In a separate securities filing, GameStop disclosed Furlong was fired on Monday and said he will be permitted to receive payments and benefits "associated with a termination without cause." Furlong also resigned from the company's board on the same day, which reduced it to just five members.
The filing noted Cohen will be in charge of capital allocation, evaluating potential investments and acquisitions and overseeing the managers of GameStop's holdings.
In a cryptic tweet posted about a half an hour after Furlong's firing was announced, Cohen wrote: "Not for long."
The activist investor and Chewy founder is known for saying very little publicly and making vague statements online.
The decision to part ways with Furlong comes just months after GameStop reported its first quarterly profit in two years while he was at the helm.
As part of the leadership shuffle, Alan Attal, a former Chewy executive and a current member of GameStop's board, was named lead independent director of the board, the filing said.
Mark Robinson, GameStop's general counsel, was named the retailer's general manager and principal executive officer. His duties will include "administrative matters, corporate development, legal affairs and support for GameStop's holdings, including the oversight of other executive officers besides [Cohen]," according to the filing.
Robinson will report directly to Cohen and will continue to serve as general counsel and secretary of GameStop.
Furlong was appointed as GameStop's CEO in June 2021 when the company was in the early stages of a turnaround plan. The former Amazon executive was appointed as GameStop was transitioning from a longtime brick-and-mortar retailer to an online player with the ability to compete with rivals like Walmart, Sony and Microsoft.
Prior to his tenure as GameStop's CEO, which lasted about two years, Furlong spent nearly nine years at Amazon, most recently leading the growth of its Australia business. Prior to that, he served as a technical advisor to the head of Amazon's North America consumer business and worked for Procter & Gamble.
Furlong could not immediately be reached for comment.
The announcement coincided with GameStop's fiscal first quarter earnings release. In the three months that ended April 29, GameStop reported revenue of $1.24 billion, down from $1.38 billion in the year-ago period. Its net loss narrowed to $50.5 million, or 17 cents per share, from $157.9 million, or 52 cents a share, a year earlier.
Sales in United States, Canada and Australia dropped by 16.4%, 18.5% and 8.9%, respectively, compared to the year-earlier period, while sales in Europe increased 26.2% year over year, according to GameStop's quarterly filing.
The company attributed the drop in sales to currency fluctuations, fewer significant gaming title launches and soft sales in pre-owned software and hardware and collectibles. In the collectibles category, where GameStop has the ability to drive long-term growth, sales dropped to $173 million, compared to $220.9 million in the year-ago period.
The company incurred $14.5 million in transition costs related to its restructuring efforts in Europe. It noted it will take more transition charges in the current quarter.
GameStop has improved its margins by dramatically slashing costs. Selling, general and administrative expenses came in at $345.7 million for the quarter, down from $452.2 million in the year-ago period.
In a news release, the company said it would not hold a conference call to discuss the quarter's earnings.
Read the full earnings release here.
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