A GameStop location on 6th Avenue in New York on March 23, 2021.
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Just hours after being named GameStop‘s CEO, Ryan Cohen sent out a memo to employees Thursday that emphasized he will take dramatic steps to ensure the struggling video game retailer survives.
“Our job is to make sure GameStop is here for decades to come,” he wrote in the email that was sent to corporate employees and store leaders and obtained by CNBC. “Extreme frugality is required. 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.”
Cohen, a billionaire activist investor and founder of direct-to-consumer pet food and supply retailer Chewy, was named the company’s new leader Thursday morning. He was previously executive chair of GameStop. As of late June, his firm RC Ventures was the company’s largest shareholder with a 12.09% stake, according to FactSet.
Cohen’s CEO announcement previewed the company’s emphasis on slashing costs: He will not receive a salary in his new role.
Cohen became an integral part of the “meme stock” frenzy, as he invested in companies including now bankrupt Bed Bath & Beyond. He joined GameStop’s board in 2021 in the thick of the phenomenon.
Cohen’s new role kicks off the latest chapter of GameStop’s effort to reinvent itself. The Grapevine, Texas-based retailer, which was founded in the 1980s, built its business on selling video games, consoles and other gaming merchandise.
Yet as customers buy video games online, it has fallen from relevance and had to chase new ways make money. It has experimented with new businesses, such as launching an NFT marketplace and striking a partnership with now bankrupt cryptocurrency exchange FTX.
The company has also dealt with major leadership changes. With Cohen on its board, GameStop tapped multiple Amazon veterans, including Matt Furlong, who became CEO, and Mike Recupero, who became chief financial officer.
Yet GameStop fired both of those leaders. Cohen got the top job nearly four months after the company ousted Furlong.
GameStop shares closed at $16.84 on Thursday and have fallen nearly 9% this year. The closing price was less than a quarter of its all-time high close of more than $86 a share in January 2021.
Earlier this month, GameStop reported a second-quarter net loss of $2.8 million, compared to a $108.7 million loss in the prior-year period.
Read the full memo below:
I will be straight to the point.
It is not sustainable for GameStop to operate a money losing business. The mission is to operate hyper efficiently and profitably. Our expense structure must allow us to endure any adverse scenario. Whether it’s a difficult economy or revenue deceleration from shrinking software, we must be profitable. Our job is to make sure GameStop is here for decades to come. Extreme frugality is required. 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.
Prospering in retail means survival. If we survive, we stay in the game. Survival is avoiding the deadly sins that often lead retailers to self-destruct. This is usually a result of the following – buying bad inventory, using leverage, and running expenses too high. By avoiding these self-inflicted mistakes and focusing on the basics, GameStop can be here for a long time.
I expect everyone to roll up their sleeves and work hard. I’m not getting paid, so I’m either going down with the ship or turning the company around. I much prefer the latter.
It won’t be easy. Best of luck to us all.
This story is developing. Please check back for updates.
— CNBC’s Gabrielle Fonrouge contributed to this report.