GameStop fired its CEO Matthew Furlong and appointed its board chairman Ryan Cohen as executive chairman effective immediately, the company said Wednesday.
Shares of GameStop dropped more than 20% in extended trading after the video game retailer announced the termination. It released the news on the same day it reported its revenue dropped and its loss narrowed in its fiscal first quarter compared to the year-ago period.
The company 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’s investment firm RC Ventures currently has an 11.9% stake in GameStop, according to filings.
In another 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, Alain 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.
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. It reported a net loss of $50.5 million, or a loss of 17 cents per share, compared to a loss of $157.9 million, or 52 cents a share, a year earlier.
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.
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