Reggie Fils-Aimé, the former president of Nintendo of America, joined GameStop’s board of directors in 2020 when the video game retailer’s stock was trading for less than $5 a share. A year later, the stock had risen to nearly $150, and Fils-Aimé was on his way out. Why did he go while it was so hot outside? Apparently, GameStop’s new meme-star investor doesn’t see the former Nintendo CEO as having a role or a clear plan for transforming the brick-and-mortar chain.
Fils-Aimé told Bloomberg’s Emil Chang on stage at SXSW over the weekend, “As the strategy was beginning to be developed, I asked to be part of the team to develop the strategy.” “I was familiar with the industry.” I’d experienced it both as a customer and as a vendor. I had very strong thoughts about how the company should be restructured, but I was turned down.”
Big hedge funds, Reddit traders, and a slew of other tricks helped GameStop go from garbage stock to meme jackpot, artificially inflating the price well above what anyone expected, hitting a high of $483 at one point. It also entailed e-commerce billionaire Ryan Cohen making a large investment in the elderly shop and eventually seizing control of its board of directors, suggesting to backers that GameStop would be turned into a primarily online operation.
“The perspective was, Reggie: we want to keep the team small, so it’ll be myself [Ryan Cohen] and a few of the people that I brought on board, who, by the way, don’t know this business, don’t understand the players, etcetera,” Fils-Aimé explained. “I took that as a thank you code, but we don’t want any other ideas, and that was unacceptable to me.”
It’s still unclear how Cohen will resurrect GameStop a year later. Since November, the inflated stock price has been declining, and it just dipped below $100 for the first time in a year. The company’s recent earnings have been disappointing, and it has ceased answering questions during investor calls. Despite the fact that gaming console sales are still strong, a growing percentage of game purchases is shifting digital every year.
Fils-Aimé stated, “There hasn’t been an articulated strategy.” “You can go to the GameStop website for further information. Make an effort to devise a plan. There is no clear strategy in place. ‘Well, we don’t want to describe our strategy because we don’t want somebody to steal our strategy,’ argues leadership. From a business standpoint, you must convey your plan to all of your important constituents—you must communicate your strategy to your business partners, vendors, employees, and shareholders—you must communicate your strategy, and the three public boards on which I serve all do so.”
One thing Cohen’s GameStop has done is spend a lot of money on attempting to transition into a tech firm. Last summer, the company raised over $1 billion by selling more stock, and it appears that some of that money was spent on new warehouses to compete with Amazon’s delivery times, as well as more office space in Seattle and Boston, two of the country’s most expensive real estate markets, to attract more tech workers. Of course, blockchain and NFTs are included in the mix.
Is there one area where GameStop isn’t investing? The people that run the stores. Last year, employees told Kotaku that the holiday rush had pushed several of them to their limits. Despite high shop turnover and record inflation, the firm allegedly refused to give raises or keep some sites fully staffed. They were also unaware of Cohen’s plan to turn things around if he had one.