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| GameStop's Newly Appointed Billionaire CEO Urges 'Radical Frugality' in Message to Team |
After years of exerting influence from the shadows, GameStop's chairman and billionaire founder of Chewy, Ryan Cohen, made a significant move by appointing himself as the CEO of the struggling video game retailer on Thursday. In an email obtained by Kotaku, Cohen wasted no time in setting a new course for the meme stock company, emphasizing the need for "extreme frugality" and a zero-tolerance policy toward time-wasting as they battle to stay afloat.
Cohen addressed corporate employees, stating, "It is not sustainable for GameStop to operate as a money-losing business." Despite effectively leading the company for a couple of years, during which he attempted short-lived ventures into improved online deliveries, NFTs, and diversifying product offerings like gamer chairs and TVs, GameStop continued to grapple with profitability issues under his leadership.
Recent executive departures, including Cohen's dismissal of his own hand-picked CEO, Matt Furlong, earlier this year, have left the company seemingly more uncertain than ever. In 2022, GameStop implemented multiple rounds of layoffs and continued to reduce staffing levels at individual stores, despite still maintaining approximately $1 billion in cash reserves from the meme stock phenomenon.
Cohen's initial email to employees as CEO conveyed a stark and stern message. He wrote, "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."
However, it remains unclear what cost-cutting measures are left to implement within the company. GameStop's core challenge revolves around the ongoing shift from physical game sales to digital downloads. A recent Xbox leak even suggested that Microsoft might phase out disc drives for its consoles altogether. While collectible merchandise such as Funko Pop! has gained more shelf space in GameStop stores, it has yet to compensate for the declining sales of used games.
Below is the full text of Cohen's email to GameStop employees:
I'll get straight to the point.
It is not sustainable for GameStop to operate as a money-losing business. Our mission is to operate with hyper-efficiency and profitability. Our expense structure must enable us to weather any adverse scenario, be it a challenging economy or declining software revenues. We must be profitable. Our duty is to ensure that GameStop remains a thriving entity for decades to come. Extreme frugality is our mandate. Every expenditure within the company must undergo rigorous scrutiny, and all forms of waste must be eradicated. We cannot afford delegation and squandering of resources. I expect every one of you to treat the company's funds as if they were your own and set an example.
Success in the retail industry hinges on survival. If we survive, we remain in the game. Survival involves avoiding the pitfalls that often lead retailers to self-destruction. These pitfalls typically include making poor inventory choices, leveraging excessive debt, and running high operational costs. By steering clear of these self-inflicted mistakes and focusing on fundamental principles, GameStop can endure for the long haul.
I anticipate everyone rolling up their sleeves and putting in hard work. I'm not drawing a salary, so I'm committed to either turning the company around or going down with the ship. The former is my clear preference.
This journey won't be easy. Best of luck to all of us.
Ryan Cohen
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