Gaming retailer and meme stock extraordinaire GameStop (NYSE: GME) has fired its Chief Financial Officer Michael Recupero, according to an 8-K form and an internal memo sent to employees.
According to the company's SEC forms filed last night, the company terminated its CFO without cause and would be replacing him with Diana Saadeh-Jajeh, GameStop's current Chief Accounting Officer. The move is a considerable departure from standard corporate practice, which typically involves an executive "leaving the company" and quietly moving on to another opportunity. Recupero, however, is only the first member of GameStop corporate on the chopping block.
A memo was sent to GameStop employees yesterday announcing Recupero's departure, as well a "number of reductions" to the company's corporate staff. According to sources that have spoken to a number of outlets, the exact number of "reductions" isn't clear, though some rumors have circulated that it could be as high as 25%.
The company has not specified if job cuts apply solely to its corporate offices or if it affects retail locations as well. However, the memo sent to employees mentions a "significant investment" in retail managers and employees that will be further explained in the coming weeks.
It's hard to tell how GameStop's latest decision will affect its restructuring into a more digitally oriented brand, a process that began last year amid shake-ups in the company's c-suite. The transition has been beneficial for the company, which has sought to increasingly capitalize on the newfound attention it has from casual investors after becoming a market-breaking meme stock.
Cutting costs and slimming down while the company pivots to a business model more desired by consumers is already helping to put GameStop back into relevance, though the company still faces a steep hill trying to carve out more of the gaming market than it already has. Digital distribution on PC is already dominated by platforms such as Valve's Steam and competitors like EA's (NASDAQ: EA) Origin, with Microsoft's (NASDAQ: MSFT) Xbox and Sony's (NYSE: SONY) PlayStation having their own digital storefronts to buy games. GameStop is entering a market with well-established players, and while shifting its business model will help it enter said market, the company has yet to prove that it can contend with the big names that dominate it.
The announcement sent GameStop shares plunging overnight, coming just after markets closed Thursday afternoon. After a relatively strong day on Wall Street, GameStop shares tumbled 6% in aftermarket trading. While shares have recovered a bit after markets opened on Friday, the gaming retailer is still down 4.9% from Thursday.