GameStop (NYSE: GME) CEO George Sherman may have presided over his company's meteoric rise on the New York Stock Exchange. Nevertheless, the company's board of directors feels he doesn't quite have what it takes to keep the aging retailer from going the way of Blockbuster.
In a recent press release, the company announced that Mr.Sherman will be stepping down from his post on July 31. Stepping in, albeit not as CEO, is activist-investor and Chewy (NYSE: CHWY) co-founder Ryan Cohen. Mr.Cohen has used his 12.9% stake in the company to steer its board of directors.
Sherman is credited internally with streamlining GameStop's operations over the course of the pandemic. Nevertheless, he also consistently failed to meet performance targets, forfeiting $98 million in stock options last month as a result.
Mr. Sherman was also hamstrung by 25 years of brick and mortar retail experience. Experience which could've made it difficult for him to embrace the digitally-focused future Mr. Cohen has in mind.
According to GameStop's 10-K form, the company has since turned to a third-party firm to help scout for Mr. Sherman's replacement. The board will screen for candidates "with the capabilities and experience to help accelerate the next phase of the Company's transformation."
A transformation that has only accelerated since Mr. Cohen took a controlling interest in the company back in September. Two months later, he penned a strongly-worded open letter to GameStop's board of directors. In the letter, Mr. Cohen claimed that the board lacked the "strategic vision" the company needed to "pivot toward becoming a technology-driven business that excels in the gaming and digital experience world's."
Since becoming head of GameStop's Strategic Planning and Capital Allocation Committee, its CFO, it's Chief Customer Officer, and now its CEO have all exited.
Mr. Cohen hopes to apply the principles he developed at Chewy to upgrade GameStop for the 21st century. An anonymous source told Bloomberg back in September that Mr.Cohen hopes to transform GameStop into a "true competitor with Amazon (NASDAQ: AMZN)." The broad strokes of his plan amount to offering a wider range of merchandise online while priority on fast shipping. Cohen has also advocated digitizing the company's trade-in system.
But for now, GameStop's battle remains uphill.
"I have a hard time foreseeing how GameStop can morph into a credible competitor to Amazon," Anthony Chukumba, an analyst at Loop Capital, told Bloomberg in September. "There are a lot of companies with much deeper pockets than GameStop that have had a very difficult time competing against Amazon, and some are barely competing with Amazon -- Walmart (NYSE: WMT), for example."
Nevertheless, some investors remain hopeful about GameStop's future, given Mr. Cohen's track record. Still, it remains to be seen whether his changes will be enough to keep GameStop from going the way of Sears, JC Penny, and other fading retailers.
Time will tell.