GameStop Does Mass Layoffs As Meme Stock Surges

A photo shows the GameStop sign above one of its stores.

Photo: Michael M.Santiago (Getty Images)

A ruthless sea change is underway at GameStop. The company’s latest Chief Financial Officer, Mike Recupero, has resigned and another round of mass layoffs is underway at the video game retailer 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 eliminating 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 Informerthe 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 same 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 filingSaadeh-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 outstanding shares increases by a specific multiple, the total dollar value of all outstanding shares 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 about 10%. It ended trading at just over $135 a share today.

Update: 7/7/22, 5:25 pm ET: Added more information about executive pay.

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