GameStop fires its CFO and looks to cut staff

GameStop has fired its chief financial officer and is preparing to make cuts to its staff. Shares of the company’s volatile stock fell 5% in premarket trading Friday. The stock rose 15% Thursday after the company planned a four-for-one stock split, GameStop (GME) did not give a reason for firing CFO Michael Recupero, other than to say that under terms of his employment agreement it was “without cause.” Still, it is unusual for a company to disclose that a top officer had been fired, rather than simply say that he or she had left to the company. Chief Accounting Officer Diana Saadeh-Jajeh has become the company’s new CFO. Although the firing was disclosed by the company, its plans to cut staff was not. The company did not respond to requests for comment on its job cut plans, which were reported in several media reports that cited a memo to staff sent out by CEO Matt Furlong. “After making more than 600 corporate hires in 2021 and the first half of 2022, we have a stronger understanding of our transformation needs,” said Furlong in the memo. “This has positioned us to right-size headcount across several corporate departments.” During the course of 2021 GameStop opened additional corporate offices in Seattle, Boston, and Pembrook Pines, Florida, as “part of … efforts to attract talent,” according to a company filing. In March, GameStop reported it had 12,000 full-time employees and between 14,000 and 28,000 part-time workers worldwide, depending on the time of year The planned job cuts are part of a growing trend of staffing cuts at companies. Overall firings and layoffs have dropped to record low levels, according to recent job reports from the Labor Department, as employers have scrambled to find the workers they need to fill job openings. But there are also growing worries that the US economy could be entering a recession, and some employers are trimming staff. US-based employers announced plans to cut 32,500 jobs in June, a jump of 57% from the 20,700 job cut announcement in May, according to outplacement firm Challenger, Gray and Christmas. GameStop lost $158 million in its most recent quarter, worse than the $67 million loss in the year-earlier time period. For its fiscal year ending in January, it lost $381 million, compared to a loss of $215 million for the fiscal year ending in January of 2021. Despite these losses, GameStop became famous as one of the most extreme examples of a so-called meme stock, a company whose shares were driven by a large number of individual investors betting on a battered stock. Even though GameStop has regularly lost money it became a favorite of a group of investors who lifted its shares nearly 2,500% in the early weeks of 2021, before giving back most of those gains in the subsequent weeks. Even with that retreat in share price early last year, the stock ended 2021 up 688% for the year. But 2022 has not been as good for GameStop shareholders, and shares were down about 21% so far this year before the surge in share price Thursday. Even with that one-day gain, shares were down 9% for the year, before Friday’s premarket sell-off.