GameStop Corp is looking for a new chief executive to replace George Sherman as it pivots from a brick-and-mortar video game retailer to an e-commerce firm, three people familiar with the matter said on Monday.
It would be the biggest shakeup at GameStop since Ryan Cohen, the co-founder and former chief executive of online pet food company Chewy Inc, joined its board in January and began laying the groundwork for a shift in culture and strategy, people familiar with his work at GameStop said.
Its stock is up almost 4,000% from a year ago, after it became the poster child of day traders betting on so-called meme stocks.
GameStop's board is working with an executive headhunter on the CEO search, said the sources, who requested anonymity because the matter is confidential.
Several GameStop board directors are involved in the search and have spoken with potential candidates from the gaming industry, as well as the e-commerce and technology sectors, the sources said.
A GameStop spokesman declined to comment.
GameStop shares ended trading on Monday down 11% at $141.04, giving the company a market value of about $10 billion. The stock hit a record high of $483 in late January.
The CEO replacement is the latest in a string of changes pursued by Cohen since he joined GameStop's board.
Former Chief Financial Officer Jim Bell and Chief Customer Officer Frank Hamlin are among the senior executives who have left the company in recent weeks.
Sherman, who has been CEO since April 2019, has been credited internally with slashing costs and steering GameStop through the COVID-19 pandemic that led many retailers to go out of business.
But Sherman's 25 years of experience have been largely with brick-and-mortar retailers, such as Advance Auto Parts Inc and Home Depot Inc, and his experience is seen as less relevant to the digital transformation, two of the sources said.
Cohen, who last week was named GameStop's board chairman, is seeking to make the company the online destination of choice for video game fans, just as Chewy won over pet lovers.
He pushed for a number of hires at GameStop, including Elliott Wilke as chief growth officer, Jenna Owens as chief operating officer and Matt Francis as chief technology officer. All three previously worked at Amazon.com Inc.
Cohen also brought on people from Chewy, including Andrea Wolfe as vice president of brand development, Neda Pacifico as senior vice president of e-commerce and Kelli Durkin as senior vice president of customer care.
GameStop last week increased the value of new stock it may sell from $100 million to $1 billion, as it moves to capitalize on a surge in its shares from the retail trader-driven rally in January.
That rally has fizzled in recent days. Many Wall Street analysts remain skeptical about the company's ability to reinvent itself. Of seven analysts covering GameStop, five currently recommend selling the stock and only two rate it as "hold."
"We remain very concerned about the long term prospects for (GameStop's) video game business, especially once hardware sales temper as the installed base matures," Ascendiant analyst Edward Woo wrote in a note on Monday.