GameStop CFO was forced to shut down as activist investor drives new strategy

Tuesday’s exit of the CFO is part of the wider GameStop cleanup, according to those familiar with the matter. Mr. Cohen, the co-founder of Chewy, the online pet food retailer Inc.,

last November, he announced a nearly 10% stake in GameStop through his investment firm RC Ventures LLC. At that point, Mr. Cohen sent a letter to GameStop’s board urging them to conduct a strategic review of the business and reduce its reliance on physical retail, and instead focus on e-commerce.

While the company’s market value has exploded temporarily this year and inventory surged significantly on Wednesday, the brick-and-mortar business hasn’t changed that dramatically. The turnover of the approximately 5,000 retail chain has been declining for several years. It faces the same fundamental challenge as before as booksellers and music stores: a shift from physical copies to digital downloads. The company also faces increasing competition from Walmart Inc.

and Amazon.com Inc.

and experience a high managerial turnover.

Since then, Mr. Cohen has pushed for several changes to the video game store.

In January, GameStop said it had reached a deal to join Mr. Cohen, Chewy’s former Chief Operating Officer Alan Attal and former Chewy CFO Jim Grube. RC Ventures agreed to increase its stake to no more than 19.9% ​​for several months.

GameStop has also made a number of important commitments to stimulate corporate overhaul. The company announced earlier this month that it has hired Matt Francis, a former manager of Amazon.com Inc., who assumed the newly created role of Chief Technology Officer on Feb. 15. It also recruited Josh Krueger, who previously worked at Amazon and Walmart. – as vice president of fulfillment. Kelli Durkin, who served as vice president of customer service at Chewy, is GameStop’s new senior vice president of customer service.

Mr. Cohen has said he plans to modernize the company by focusing more on e-commerce and opportunities in technology-driven areas such as esports and mobile gaming, according to a November filing with the Securities and Exchange Commission. He also wants GameStop to end leases at underperforming stores and close non-essential operations in Europe and Australia to pay for technology improvements. The company is currently active in 10 countries.

A possible turnaround at GameStop isn’t something Wall Street is betting on yet. The company, particularly Mr. Cohen, must develop a growth strategy and use it to re-attract institutional investors, many of whom went short on stocks, said Michael Pachter, a research analyst at financial services firm Wedbush Securities Inc. “That’s a real challenge,” said Mr. Pachter. “But when Ryan Cohen starts to show that they’re a growth story, then institutions come back, the stock works and everyone makes money.”

Industry analysts see many lucrative revenue options for GameStop, including leveraging the brand recognition and reach within the gaming community.

GameStop should focus on its community and encourage people to come to its stores, said Ray Wang, an analyst with consulting firm Constellation Research Inc. “To do the whole Blockbuster-to-Netflix thing, you have to bring that community back to GameStop, from where they went to other social media sites,” Mr. Wang said.

GameStop said it has started its search for a new CFO and plans to appoint its Chief Accounting Officer Diana Jajeh as interim financial head if it has not found a replacement when Mr. Bell leaves. The company is looking for a CFO with a background in e-commerce or technology who can develop strategies in areas such as capital allocation and financing, said those familiar with the matter.

—Miriam Gottfried, John McCormick, Angus Loten, and Sarah Needleman contributed to this article.

Write to Nina Trentmann at [email protected] and Mark Maurer at [email protected]