Subject: Survival

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.

Ryan

  • jergyEnglish
    222·
    1 year ago

    It comes off rather grim.

    But, this is just a letter to set the stage for RC as the new CEO, what his employees can expect of him. Grim maybe, but it might just be hard dose of reality.

    Recent words by Pulte also seem to lean towards this notion that we are up against powerful forces that oppose our success, and that victory won’t be easy.

    RC has emphasized to judge him by his actions and not his words. And, from my point of view, the action sequence in summary has gone kind of like this:

    • RC buys in to GameStop
    • RC replaces the entire board and becomes chairman
    • GameStop raises $1.7 billion through the 2 ATMs, pays off debts, provides funding for operations, etc.
    • 2 years later GameStop currently holds nearly $900 million in cash and a negligible amount of debt
    • GameStop’s recent quarter showed very small losses overall, a major improvement over previous years
    • RC is now in the CEO chair and has the most at stake here

    Though this letter has a particular tone that might come off as grim, it seems to me like GameStop is in a pretty safe position regardless. I’ve seen some comments on Reddit about appearing weak when you are strong, that whole art of war thing.

    In any case, I trust that RC is the man for the job, he puts his money where his mouth is, and he works hard. I feel confident knowing that the interests of this person leading the company are in alignment with my own interests as a shareholder.