GameStop Moves To Make Top Shareholder Ryan Cohen New Board Chair

In just four months, 35-year-old billionaire activist investor and Chewy Co-Founder Ryan Cohen has gone from GameStop major shareholder, to special consultant, to rank-and-file board member, to now being nominated to become the embattled company’s next chairman.

If shareholders approve Cohen at the June 9 annual meeting, it will not only mark his rapid and complete takeover of the company, but underscore his grip on the pace and execution of GameStop’s ongoing transformation to become, in the words of CEO George Sherman, “a customer-obsessed technology company that delights gamers.”

The nomination of Cohen — and a slate of five other directors — appeared to be welcome news to investors, who have seen the retailer’s stock go from $5 to almost $500 in the past six months, amid a swirl of unprecedented speculation by passionate believers and skeptics of the turn-around story.

In nominating Cohen, GameStop also reported that current chair Kurtis Wolf had resigned effective April 5, noting in federal filings that his departure didn’t result from a disagreement over operations, policies or practices.

The Cohen Effect

The board shakeup news is the second major company announcement in the past four days, and comes after a Monday (April 5) revelation that that GameStop had filed to sell up to $1 billion of new shares, at current market prices, to help fund the ongoing transformation of its website, service, product offerings and its global footprint of nearly 5,000 retail locations.

Those announcements follow a two-month spate of senior management changes that have seen Cohen and GameStop moving to bring in fresh leadership, including a new chief technology officer, a new chief financial officer and a new chief operating officer in the form of former Google and Amazon operations leader Jenna Owens, as well as Chief Growth Officer Elliott Wilke, who also moved over from Amazon.

Even the slate of board nominees is Cohen-esque, including the renomination of CEO Sherman, as well as Cohen allies Alan Attal and Jim Grube, who just joined the board alongside Cohen in January.

At the same time, new board director nominee Larry Cheng, a managing partner at Volition Capital, is listed as the first investor in Chewy.

The other new board nominee, Yang Xu, does not appear to have a direct link with Cohen, and is the senior vice president of global finance and treasury at The Kraft Heinz Company.

Now The Hard Part

With the new executive team assembled and almost in place, and GameStop’s liquidity position  buttressed by up to $1 billion of fresh equity, the Texas-based retailer will presumably try to extract itself from months of crisis-mode management and transition to more normalized day-to-day business operations.

Investors got a glimpse of that next/new phase earlier this week when the company preannounced partial first-quarter sales results that showed, two-thirds of the way through the quarter, its first nine weeks of sales rose 11 percent through April 3.

The company also noted that over the past five weeks, its sales growth rate had accelerated to 18 percent, but reminded investors that year-over-year sales comparisons will start to become highly impacted and distorted by the shuttering of almost all locations due to the initial pandemic closures in 2020.

As it stands right now, GameStop’s market value sits at roughly $12.5 billion, or about the same as Macy’s and Kohl’s combined.