In a press release on Monday (April 19), the Grapevine, Texas-based firm said that its board had retained an outside executive search firm to find a new CEO, less than two years after Sherman was appointed to the role in 2019.
“The Board’s Strategic Planning and Capital Allocation Committee is leading a search to identify chief executive officer candidates with the capabilities and experience to help accelerate the next phase of the Company’s transformation,” the company statement said, without providing further details as to what professional traits it will seek in the next CEO.
The move marks the latest step by top shareholder Ryan Cohen, the 35-year-old billionaire co-founder of Chewy.com who was last reported to own about 13 percent of GameStop, to take full control of the company, including a half-dozen senior executive appointments and a revamp of the company’s board — including his own nomination to become chairman.
“GameStop appreciates the valuable leadership that George [Sherman] has provided throughout his tenure. He took many decisive steps to stabilize the business during challenging times. The Company is much stronger today than when he joined,” the incoming chairman said. “On a personal note, I also want to thank George for forming important partnerships with the new directors and executives who have joined GameStop in recent months.”
Once the CEO role is filled, GameStop will have changed its entire executive management team since the start of the year, beginning with Cohen’s appointment to the board — as well as a new chief technology officer, a new chief financial officer, a new chief operating officer and a new chief growth officer.
In addition, Cohen has packed the board with allies in just a matter of weeks, announcing a slate of hand-picked candidates two weeks ago that included Alan Attal and Jim Grube, who just joined the board alongside Cohen in January, as well as new board director nominee Larry Cheng, a managing partner at Volition Capital who is listed as the first investor in Chewy.
Sherman was also on GameStop’s new board nomination list, but it remains to be seen whether a change will be made on that front as well, ahead of a shareholders’ vote on the board picks coinciding with the company’s annual meeting on June 9.
Prior to the CEO news, the company also announced that it is preparing to sell more stock at present market levels, a move that could raise up to $1 billion to be used to fund the company’s makeover.
To be sure, GameStop has been on a wild ride over the past six months, with its stock price vaulting from $5 to as high as $483 amidst a swirl of conflicting investor speculation that it was either going out of business or headed to the moon. So far, the latter group — including Cohen — is prevailing in that argument.
That said, as investors await the next phase of the retailer’s transformation, the red-hot stock has been undergoing a bit of a cool-down. Since the middle of March, the company’s stock price has fallen about 30 percent, shedding over $3 billion in value and leaving it with a market cap of roughly $11 billion. To be sure, GameStop is still exponentially higher than when it was trading below $5 per share just six months ago, but the retreat does point to a growing demand for tangible business results rather than just front-office hires.
At its last earnings update in March, GameStop’s now-outgoing CEO said the company was focused on becoming “a customer-obsessed technology company that delights gamers.” The company now has about one month left in its current first quarter to put together results that will support that aspiration.
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