GameStop Does Mass Layoffs As Meme Stock Surges
A ruthless sea change is underway at GameStop. The company fired its Chief Financial Officer, Mike Recupero, and initiated another round of mass layoffs even as its meme stock continues to soar in price. CEO Matt Furlong told staff in an email reviewed by Kotaku this Thursday that the “reductions” were an attempt to help the company operate more “nimbly” as it pursues profitability through an “intense owner’s mentality.”
“Change will be a constant as we evolve our commerce business and launch new products through our blockchain group,” read the first line of Furlong’s email, referencing GameStop’s recent pivot to crypto. The email went on:
After investing heavily in personnel, technology, inventory and supply chain infrastructure over the past 18 months, our focus is on achieving sustained profitability,” Furlong told staff in an email , adding, “This means elimination excess costs and operating with an intense owner’s mentality. Everyone in the organization must become even more hands-on and embrace a heightened level of accountability for results.
While confirmation of the layoffs began pouring in on LinkedIn, it’s not yet clear how many are affected. The layoffs appear to be focused on GameStop’s Grapevine, Texas headquarters, but also appear to include some staff at Game Informer, the decades-old gaming magazine acquired by the retailer when it bought Funcoland back in 2000.
GameStop’s HQ underwent a similar round of layoffs at the end of May. Those impacted over 100 employees across a range of departments, according to one current and one former employee. GameStop did not immediately respond to a request for comment.
Furlong’s email stated that Recupero, who only started at GameStop a year ago, would be replaced by current Chief Accounting Officer, Diana Saadeh-Jajeh, making her the third executive to hold the title in as many years. The email also mentioned a new initiative to make a “significant investment” in the company’s frontline workers, but didn’t go into specific details.
Despite a $1 billion windfall from a meme stock sell off last year, employees at actual GameStop stores routinely complain about bad pay and burnout. In June, a Nebraska location temporarily closed when employees resigned in protest and told customers to shop elsewhere. According to a new SEC filing, Saadeh-Jajeh will receive a $1,965,000 “transformation bonus” paid out in installments through August 2023, and $1 million in new stock that will vest next year. That’s in addition to a $200,000 annual salary. Many GameStop store employees say they make less than $15 an hour.
This week, GameStop also announced a four-for-one “stock split” that will give investors who already own stock more shares. Per Investopedia, “Although the number of shares outstanding increases by a specific multiple, the total dollar value of all shares outstanding remains the same because a split does not fundamentally change the company’s value,” noting that the move is often pulled in an attempt to help a company boost its liquidity. As a result, GameStop’s stock has already risen approximately 10%. It ended trading at just over $135 a share today.
Update: 7/7/22, 5:25 p.m. ET: Added more information about executive pay.
Update: 7/7/22, 8:25 p.m. ET: Clarified that the CFO was fired.