NEW YORK (AP) — GameStop, the video-game retailer whose manic stock movements captivated Wall Street this year, said on Wednesday that it’s brought on a pair of Amazon veterans as its new chief executive and chief financial officer to aid in its much anticipated digital turnaround.
Matt Furlong, who most recently oversaw Amazon’s Australia business and spent nine years with the company, will start as CEO on June 21. GameStop also said that Mike Recupero, who most recently was CFO of Amazon’s North American consumer business, will begin as chief financial officer on July 12.
GameStop’s stock has been on a wild rocket ride, soaring more than 1,500 per cent this year as waves of smaller-pocketed investors piled in on hopes that it can transform itself into an e-commerce powerhouse after sales at its brick-and-mortar stores faltered.
GameStop said on Wednesday that the Securities and Exchange Commission’s staff is conducting an investigation into the trading activity in its stock and shares of other companies. GameStop said it doesn’t expect the inquiry to hurt it.
Investors have pinned much of their hopes on Ryan Cohen, a major investor who co-founded Chewy, the online seller of pet supplies. GameStop said on Wednesday that it’s still losing money, posting a net loss of USD66.8 million for the three months through May 1.
But that’s not as bad as the USD165.7 million loss from a year earlier, and its sales of USD1.28 billion was stronger than the USD1.16 billion that analysts expected. Sales grew 25 per cent even as the company closed some of its stores.
GameStop became the face of the ‘meme stock’ craze early this year, when a fanatical band of smaller-pocketed and novice investors encouraged each other to pile in. That helped trigger a “short squeeze”, which sent the stock flying.
Professional investors had sold much of GameStop’s stock “short”, essentially making bets that would profit if its price were to fall.
They were sceptical GameStop had a bright future given the migration of video-game sales toward online channels and away from GameStop’s stores.
But after the stock began rising sharply, those short sellers had to buy GameStop shares to get out of their bets, which created a feedback loop further goosing the share price.GameStop reaped the benefits of that surge by selling stock earlier this year to raise nearly USD552 million.
That helped the company end its latest quarter with USD770.8 million in cash and restricted cash.
GameStop said it plans to use its increased financial strength to accelerate its transformation. It already has eliminated all its long-term debt.