GameStop Corp. fired Chief Executive Matthew Furlong on Wednesday and said that its board had elected activist investor Ryan Cohen as its executive chairman, effective immediately.
Shares of the videogame retailer and meme stock sank as much as 22.4% in Wednesday’s after-hours session following a brief press release detailing the move. That release did not offer a reason for Furlong’s firing and was made shortly ahead of the chain’s quarterly results.
Cohen, in a tweet shortly after the announcement, said: “Not for long.”
In Thursday’s premarket, the stock was down 21.2%, which would put it on track for its worst one-day performance since it dropped 27.2% on June 10, 2021.
GameStop GME, -17.89%, in its quarterly earnings release, said it would not be holding a conference call to discuss those results. But in a filing detailing those financials, the company said Cohen’s leadership would be good for shareholders.
“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,” GameStop said.
Cohen, the co-founder and former CEO of online pet-supplies retailer Chewy Inc. CHWY, +3.02%, became GameStop’s board chairman in 2021, after joining the board that year and building up a stake in the company earlier. His influence at the company, as the Wall Street Journal reported in 2021, led to feuding with management and an explosion in popularity among the meme traders who helped launch GameStop’s stock higher. He also amassed and then sold off a stake in meme stock Bed Bath & Beyond, the home-goods retailer that is in the process of closing up shop.
GameStop announced the move on Wednesday as it struggles to put up a consistent profit and tries to cut costs. Under Cohen’s control, the company has redoubled its focus on physical stores — as more of the gaming industry becomes more online and mobile — after initially making a bigger push toward e-commerce.
GameStop, in a separate filing on Wednesday, said Cohen’s responsibilities would include “capital allocation, evaluating potential investments and acquisitions, and overseeing the managers of the company’s holdings.”
In that filing, GameStop said that Furlong was fired without cause. According to his offer letter in 2021, Furlong is due any unvested stock that would have vested in the next six months. According to the terms outlined in that letter, Furlong would have been eligible to receive nearly $2.5 million in stock in August. He’ll also receive $100,000 in base salary. The filing also said Furlong had resigned as a company director.
Furlong was named GameStop’s CEO almost exactly two years ago.
The company also said it appointed Mark Robinson as its general manager and principal executive officer. Robinson has worked as vice president and general counsel at the company since January 2022, and held other roles at GameStop since 2015, the filing said.
GameStop also said it appointed Alain Attal as the lead independent director of the board and dissolved the Strategic Planning and Capital Allocation Committee.
For its first quarter, GameStop reported a net loss of $50.5 million, or 17 cents a share — far narrower than the $157.9 million, or 52 cents a share, in the same quarter last year. Net sales were $1.24 billion, down from $1.38 billion in the prior-year quarter. GameStop ended the quarter with cash and cash equivalents of $1.06 billion.
Popular videogames, such as “The Legend of Zelda: Tears of the Kingdom” and “Hogwarts Legacy,” seem likely to help GameStop’s sales up ahead. And the company has cut costs in an effort to improve profitability.
The company reported a profit in the prior quarter, helped by holiday-season demand. Still, the two analysts polled by FactSet don’t expect another profitable quarter until this year’s holiday quarter.
Wedbush analyst Michael Pachter, in a note last week, noted that broader challenges for the retailer include “a shift towards digital, mobile and subscription software (and away from the traditional packaged business).”
GameStop shares are down 25% over the past 12 months. By comparison, the S&P 500 Index SPX, +0.62% has gained 3.7% over that period.
Jeremy Owens contributed to this story.
