After years of pulling the strings from behind the scenes, GameStop chairman and billionaire Chewy founder Ryan Cohen appointed himself CEO of the ailing video game store on Thursday. His first email to staff, obtained by Kotaku, called for “extreme frugality” and said “time wasters” would not be tolerated as the meme stock company fights to survive.
“It is not sustainable for GameStop to operate a money losing business,” Cohen, who first joined the board of directors back in 2021, told corporate employees. Despite effectively being in charge of the retailer for a couple years now, engineering short-lived pushes into better online deliveries, NFTs, and selling things like gamer chairs and TVs, GameStop has remained mostly unprofitable during his reign.
A recent exodus among the c-suite, including Cohen’s firing of his own hand-picked CEO, Matt Furlong earlier this year, has left the company seemingly more adrift than ever. GameStop initiated several waves of layoffs in 2022, and has continued to decimate staffing levels at individual stores, even though its meme stock windfall means it still has roughly $1 billion in cash reserves.
Cohen’s first email to employees after making himself boss struck a grim and threatening tone. “Every expense at the company must be scrutinized under a microscope and all waste eliminated,” he wrote. “The company has no use for delegators and money wasters. I expect everyone to treat company money like their own and lead by example.”
It’s not clear what’s left to cut at the company, however. The core of GameStop’s troubles remains an ongoing shift from physical game sales to digital downloads. A massive Xbox leak earlier this month suggested Microsoft might soon be phasing out disc drives for its own consoles altogether. Funko Pop! and other collectible merchandise has taken over more and more of the chain’s retail shelves, but has so far been unable to make up for the losses from fewer sales of used games.
Here’s Cohen’s full email to GameStop employees:
I will be straight to the point.
It is not sustainable for GameStop to operate a money losing business. The mission is to operate hyper efficiently and profitably. Our expense structure must allow us to endure any adverse scenario. Whether it’s a difficult economy or revenue deceleration from shrinking software, we must be profitable. Our job is to make sure GameStop is here for decades to come. Extreme frugality is required. Every expense at the company must be scrutinized under a microscope and all waste eliminated. The company has no use for delegators and money wasters. I expect everyone to treat company money like their own and lead by example.
Prospering in retail means survival. If we survive, we stay in the game. Survival is avoiding the deadly sins that often lead retailers to self-destruct. This is usually a result of the following - buying bad inventory, using leverage, and running expenses too high. By avoiding these self-inflicted mistakes and focusing on the basics, GameStop can be here for a long time.
I expect everyone to roll up their sleeves and work hard. I’m not getting paid, so I’m either going down with the ship or turning the company around. I much prefer the latter.
It won’t be easy. Best of luck to us all.
Ryan