GameStop Gives Activist Investor 3 Board Seats As Holiday Sales Soar
GameStop (NYSE: GME) had a merry Christmas after all, as the video game retailer said comparable sales in its physical stores increased nearly 5% in the nine-week holiday, and online sales more than quadrupled.
The company also announced that it is expanding its board of directors from 10 to 13 members, appointing three directors recommended by RC Ventures, the activist investor who has increased its stake in GameStop at around 13%, making it a major shareholder in the video game retailer.
Play the long game
While GameStop’s total sales actually declined 3.1% for the period, this was due to the fact that 11% of its stores were closed permanently or temporarily closed due to the COVID-19 pandemic. Store traffic towards the end of December was hit particularly hard by the coronavirus outbreak, which ended up hurting sales by percentage points ranging from single digits to double digits.
Despite this, the retailer cited an “unprecedented demand” for new game consoles from Microsoft and Sony as the reason for its large increase in sales.
RC Ventures, which is run by Ryan Cohen, formerly Excoriated GameStop for its business practices and requires the retailer to sell most of its stores, keeping only the most profitable.
Cohen said he was concerned that GameStop might justify keeping the status quo due to the bounce it received from the video game console upgrade cycle.
The three new directors have expertise in e-commerce, online marketing, finance and strategic planning. They will serve on GameStop’s board of directors until the annual meeting of shareholders in June, when they will stand for election alongside the rest of the video game retailer slate.
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