GameStop’s CFO was forced as the activist investor pushed for a new strategy

Tuesday’s CFO exit is an element of the wider cleanup effort at GameStop, according to people who knew the issue. Cohen, co-founder of online pet food retailer Chewy Inc.,

last November revealed a nearly 10% stake in GameStop through its investment firm RC Ventures LLC. At the time, Cohen sent a letter to GameStop’s board urging it to conduct a strategic review of the business and reduce its reliance on physical commerce, focusing on e-commerce.

Although the company’s market value temporarily rose this year and its shares made substantial gains on Wednesday, the brick retailer’s business hasn’t changed that dramatically. Revenues in the chain have been reduced by nearly 5,000 stores over several years. It faces the same fundamental challenge as booksellers and music retailers before it: moving from physical copies to digital downloads. The company has also faced growing competition from Walmart Inc.

and Amazon.com Inc.

and with a high turnover of experienced executives.

Since then, Mr. Cohen has pushed for several changes to the video game store.

In January, GameStop said it had reached an agreement for Mr. Cohen, former Chewy chief operating officer Alan Attal, and former Chewy chief financial officer Jim Grube, to join its board of directors. RC Ventures agreed to increase its stake to no more than 19.9% ​​for several months.

GameStop also made several key appointments to drive the business review. The company announced earlier this month that it had hired Matt Francis, a former Amazon.com Inc. executive, who took over as new technology director on Feb. 15. He also recruited Josh Krueger, who previously worked at Amazon and Walmart. —As a vice president of compliance. Kelli Durkin, who served as Chewy’s vice president of customer service, is the new senior vice president of customer service at GameStop.

Cohen has said he plans to modernize the company by focusing more on e-commerce and opportunities in technology areas such as sports and mobile games, according to a document presented in November to the Securities and Exchange Commission. He also wants GameStop to end leases in underperforming stores and close non-essential operations in Europe and Australia to pay for technology improvements. The company currently operates in ten countries.

A potential change to GameStop isn’t something Wall Street is betting on yet. Michael Pachter, a research analyst at financial services firm Wedbush Securities Inc., said the company, particularly Cohen, should develop a growth strategy and use it to re-engage institutional investors, many of whom they have reduced the shares. “This is a real challenge,” Pachter said. “But if Ryan Cohen starts proving that they are a growth story, the institutions will come back, the actions will work and everyone will make money.”

Industry analysts see many lucrative revenue options for GameStop, such as leveraging their brand recognition and reach within the video game community.

GameStop should focus on its community and encourage people to enter its stores, said Ray Wang, an analyst at consulting firm Constellation Research Inc. “To do all the Blockbuster on Netflix, you have to return that community to GameStop, from where they’ve gone to other social networking sites,” Wang said.

GameStop said it has launched its search for a new chief financial officer and plans to appoint its chief accounting officer Diana Jajeh as interim chief financial officer if it has not found a replacement when Mr Bell leaves. The company is looking for a financial director with experience in e-commerce or technology who can develop strategies in areas such as capital allocation and financing, said people who were familiar with the subject.

—Miriam Gottfried, John McCormick, Angus Loten, and Sarah Needleman contributed to this article.

Write to Nina Trentmann to [email protected] and Mark Maurer to [email protected]