(Reuters) – After nearly four months of phone calls and emails to GameStop Corp complaining about the slow shipment of an order, New Jersey teacher Steven Titus received a call from a video game store executive in early March.
On the line was Ryan Cohen, the billionaire co-founder and former chief executive of online pet supplies retailer Chewy, who is now in charge of GameStop’s push into e-commerce. Cohen responded to an email Titus had sent 12 hours earlier to more than two dozen GameStop executives and board members.
“NO ONE has attempted to respond, except for a confused voicemail with no clear callback or extension number. E-commerce requires a customer service team and processes that are responsive,” Titus wrote.
‘I just got your email, I’m so sorry this happened. Let me get to the bottom of this, ”Cohen said to Titus.
Cohen then asked Kelli Durkin, GameStop’s new chief of customer service, who was in charge of initiatives at Chewy that included written personal notes to customers, to investigate the matter. Titus was refunded for his purchase, even though he had not requested a refund and only complained about the delay in his order.
The anecdote, described by Titus and GameStop insiders, is representative of the intensity Cohen has brought to the Grapevine, Texas-based company as he pursues a counter-the-odds transformation of the brick-and-mortar retailer into an ecommerce business. that can compete with chain stores such as Target Corp and Walmart Inc and technology companies such as Microsoft Corp and Sony Corp.
Ever since Cohen joined the GameStop board in January, the 35-year-old entrepreneur has been obsessed with customer service, reaching out to customers late into the evening for feedback, and has made an effort to update the website and online ordering system. company, eight people who work with or know Cohen said in interviews. Cohen wants to turn GameStop into the “Chewy of gaming” with lower prices, better selection and faster delivery times, the sources said, most of which spoke on the condition of anonymity.
Wall Street analysts doubt it. Cohen – a high school graduate who says he learned the ins and outs of business from his late father, who was a glass importer – can win back GameStop customers who have become accustomed to streaming video games. Some struggle to understand why the creator of the world’s most valuable online pet supplies store would hire a dying video game store as a turnaround project.
The sources said Cohen’s efforts are driven by the belief that video game enthusiasts will turn to a dedicated internet store, just as animal lovers will turn to Chewy.
“He has the courage of conviction and that muscle remembrance to do this before,” said Jay Park, a former Chewy investor who founded Prysm Capital.
Cohen declined to comment through a spokesperson.
His turnaround attempt would have been less in the public eye had GameStop not captured the imagination in January of an army of amateur traders on social media site Reddit pushing the company’s market value to a peak of $ 33.7 billion by the end of January. helped that month, from $ 1.4 billion days earlier. It is now worth about $ 14 billion. A year ago, GameStop’s market cap was $ 250 million.
Cohen invested in GameStop last year before the stock became a social media sensation. His 13% stake in the company, on which he spent about $ 75 million, is now worth about $ 1.8 billion.
Wall Street is watching all its movements. The impeachment of GameStop’s chief financial officer last month, which Cohen insisted on, was enough to rekindle a rally in his stocks. Investors follow Cohen’s every tweet trying to understand what seemingly unrelated memes like frogs and ice cream cones mean to GameStop.
Many of Cohen’s investment plans for the company require more capital. Unlike Chewy, GameStop can’t rely on Silicon Valley, California fundraising, but it could raise hundreds of millions of dollars by grabbing the high stock price to sell stock. GameStop will be legally allowed to do so once it releases its fourth-quarter results, which are scheduled to be released on Tuesday.
None of the sources close to Cohen would comment on whether GameStop would attempt to raise capital anytime soon. GameStop declined to comment on the matter.
THE CHEWY RECIPE
Cohen founded Chewy in 2011 with Michael Day, who dropped out of college to help build the startup they sold to retail giant PetSmart for $ 3.35 billion six years later. Chewy is now a publicly traded company with a market value of $ 34 billion.
There are similarities between GameStop and Chewy that give Cohen’s supporters confidence that he can repeat his success. GameStop has been written off by many industry insiders as the next Blockbuster, the now-defunct movie rental and video game chain. Chewy was also rejected by much of Silicon Valley as a Pets.com copycat to be crushed by Amazon.com Inc.
But there are also important differences. Chewy investors forgave its losses, driven by Cohen’s large spending on customer service and marketing, as it delivered breakneck sales growth.
GameStop, on the other hand, isn’t a red-hot start-up. With its origins in 1984, it reported year-over-year sales declines for the past 10 quarters, and Wall Street analysts project Tuesday a 66% drop in quarterly sales, according to data collected by Refinitiv.
Cohen has warned GameStop insiders that there is no guarantee of success and that progress may take some time, while promising that the company will quickly reverse its financial results this year and 2022 as new video game systems such as Sony’s PlayStation or Microsoft’s Xbox are released, the sources said. He is focused on recruiting top talent, including a new CFO, the sources said.
Volition Capital co-founder Larry Cheng, the first investor to back Chewy after about 100 others early disapproved, said Cohen’s unwavering focus could pay off for GameStop.
“I certainly wouldn’t bet against Ryan. He has a knack for figuring things out, ”said Cheng.
Reporting by Svea Herbst-Bayliss in Boston; Adaptation by Greg Roumeliotis and Paul Simao