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February 24, 2025
GameStop CEO Takes Swipe at DEI, ‘Wokeness’ as Company Prepares To Sell Canadian, French Assets
GameStop CEO Ryan Cohen made waves when he took the helm as chief executive officer of the video game and nerd merch retailer in 2023, moving from a board member and investor into the C-suite.
More recently, however, Cohen has made headlines for a controversial tweet detailing GameStop’s plan to sell more than 500 stores and associated assets, as PC Gamer outlined.
“Email M&A@gamestop.com if you’re interested in buying GameStop Canada or Micromania France. High taxes, Liberalism, Socialism, Progressivism, Wokeness and DEI included at no additional cost if you buy today!” Cohen wrote in a Feb. 18 post shared to X.
Whether the factors mentioned in Cohen’s tweet were material to the notion of selling off company assets in Canada and France — or whether the sale is strictly based on more concrete economic or business-related metrics — the tweet certainly drew a great deal of attention, attracting over 836,000 views, 10,000 likes, and nearly 2,000 replies. Cohen’s X presence is often overtly political.
According to an SEC filing made in February 2024, at that time GameStop operated 203 stores in Canada and 314 in France. A company press release covering the planned asset sale was extremely concise, delivered in only a single sentence.
“GameStop Corp. (NYSE: GME) (‘GameStop’ or the ‘Company’) today announced that as part of its evaluation of its international assets, the Company intends to pursue a sale of its operations in France and Canada,” the press release stated.
GameStop Facing Significant Store Closures in Lengthy Turnaround Effort
According to PC Gamer, GameStop has long been in the process of trimming its store count. In 2019, it shuttered about 200 stores as part of a cost-cutting measure, and it exited Austria, Ireland, and Switzerland in 2023. The company further began closing its locations in Germany in 2024, with that process remaining ongoing. Per Game Rant, GameStop is also closing stores across the U.S., with many store closures leaving customers surprised and potentially irritated.
Zacks’ analysis of GameStop’s most recent earnings (Q3 2024) illustrated a company still struggling with slumping sales. GameStop reported sales of $860.3 million, notably down 20.2% from year-prior sales of $1.08 billion. Hardware and accessory sales tumbled by 28%, while software sales dipped by 15.4%. Even the collectibles category couldn’t buck the trend, ticking downward by 3.7%.
On the other hand, as CBC reported, GameStop earned $17.4 million that quarter, as opposed to posting a significant loss as it had in Q3 2023.
Zacks termed the stock a hold, noting that it had outperformed expectations over the course of the past few months. On the contrary, Wedbush analyst Michael Pachter — as cited by Fortune in December — was decidedly less optimistic.
Pachter said that GameStop shares “trade at a level that ignores the company’s many challenges ahead” and that “the company’s planned return to growth faces insurmountable barriers.”
GameStop May Follow in Blockbuster’s Footsteps, Sooner or Later
With many outlets having offered conjecture over the years as to GameStop’s future — a 2021 Yahoo! Finance report termed the company a “past-its-prime mall retailer” — comparisons to Blockbuster Video often enter the conversation.
For one, both companies suffered the indignity of being tied to an obsolete business model. In GameStop’s case, the attempted pivot away from physical media software sales into the kitsch and collectibles market has delivered only middling results. Competition is fierce in this market, from mom-and-pop stores to retail giants such as Walmart and Amazon, and digital software delivery is becoming the industry standard.
The rate of decline in US physical video game software spending accelerated in 2024.
Spending on physical video game software in the US has been cut in more than half since 2021 and is now more than 85% below its 2008 peak.
We'll see if Switch 2 can help slow/reverse this trend in 2025.
— Mat Piscatella (@matpiscatella.bsky.social) January 24, 2025 at 3:54 PM
According to My Nintendo News, spending on physical games has halved since 2021 alone and is down more than 85% since its peak in 2008. This represents an extremely difficult position for GameStop, as physical game sales are at the core of its business model — particularly regarding its trade-in program and used games segment. Further, many game developers regard GameStop as a middleman that can be removed from the equation through direct sales to consumers via their own portals (Origin, Epic, etc.) or even via third-party portals, such as Steam. A digital game costs nearly nothing to distribute, and manufacturing and shipping costs associated with physical media sales are no longer a consideration under the emerging model. Boutique sales for limited-run products are likely to persist, however.
With physical games going the way of the dodo in the near future (as Ars Technica pointed out, the PS5 Pro’s lack of a physical disc drive gestures toward the end of an era) and the secondary market filled with other major players, GameStop’s attempted turnaround faces some extreme headwinds.
Discussion Questions
Is Ryan Cohen’s post on X reflective of a growing trend concerning DEI practices among retailers, or are other economic or business factors more pertinent to GameStop’s rash of store closures?
Is GameStop headed for a similar fate to Blockbuster Video in the near future? What could potentially be done to successfully execute a turnaround?
What opportunities exist for GameStop to participate in an increasingly digital marketplace concerning its core products?
Poll
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GameStop is one of those firms about which you periodically ask whether it is really needed as things become more digital. Some of the latest numbers show this. For the third quarter, revenues plunged by 20.2%. This follows on from a 9.1% decline in the prior year. The hardware part of the business might bounce back as the economy and console release cycle strengthens, but I am not so sure about the software side. For the moment, Game Stop has a good cash position. The question is: does it have a purpose?
Au revoir Ryan! Whatever the merits of his position. overtly politicizing business decisions is a sign of weakness – and if we assume he’s truly interested in disposing of the Franco segments, truly stupid … I’ll not be wishing them well.
Exactly!
Totally agree. And there is the potential of backlash in those markets which would only reduce the value of the assets he’s trying to offload. Not a smart play.
GameStop’s challenges were well understood before Ryan Cohen took the helm. This business is facing considerable, systemic market challenges. The chart of video game spending tells you everything you need to know. Cutting costs and selling assets can keep the business going, but unless you can solve for consumer demand, then you’re fighting an uphill battle. GameStop needed to make bigger moves in the digital space sooner, and now it feels too late. DEI has nothing to do with anything here.
It is not Ryan Cohen’s DEI post on X that is responsible for GameStop’s store closings. There are many reasons for the closure of the stores, mostly related to the stores’ antiquated business model. There is, however, a rapidly growing trend for retail companies to abandon DEI practices.
A number of companies are shifting their focus away from DEI as a result of economic pressures and shareholder demands for profitability. Profitability has not been demonstrated for DEI.
Developing a team and assembling a comprehensive staff through DEI is a very unnatural process. Diversity initiatives can seem forced, as they may place an emphasis on diversity metrics rather than organic team dynamics.
It is possible that this approach might lead to tokenism, in which individuals are recruited because they fulfill quotas rather than because they possess particular skills or fit into a specific team. These practices may also inadvertently create tension among team members who feel that selections are not based on merit.
There are some very judgmental people who believe that those who oppose DEI are racist, but that is an unfair assessment, and highly ironic. People of color who have earned their jobs and promotions based on experience, capabilities, and skills feel slighted when others were advanced solely based on their race.
It is ironic that DEI is also inherently not inclusive because even people with unique qualifications are passed over for jobs and promotions because of their racial or ethnic background.
do we really have to tie everything back to DEI?? How about the businesss model. It’s dead as a door nail. What the heck does dei have to do with that? Enough. We should ignore that level of BS
The Blockbuster comparison is a valid one. Unfortunately for Gamestop, gamers are finding little need for it in an era where digital downloads rule the industry. This has nothing to do with DEI, and Ryan Cohen’s tweet is quite mind boggling and does little to encourage any potential buyers. At this point, carving up the business and selling it piecemeal is not a strong turnaround strategy – it’s a recipe for shutting down the business. As we approach another hardware refresh cycle for gamin consoles, it’s possible Gamestop could see some improvement, but it’s also equally likely the next generation of consoles will forego physical media completely, so those hardware sales aren’t likely to deliver any long-term benefit for Gamestop.
Adding collectibles has only slightly helped, and as mentioned in the article, this is a highly competitive area. Gamestop needs to find new areas to focus on, but it is likely the business will be a smaller one, with fewer locations. Perhaps focusing on esports more broadly could help (especially with hardware sales), but even this leads to a need to host competitions, and given the small size of most Gamestop locations this may not be a feasible option. Gamestop needs a dramatic and bold change of direction so the question is can Ryan Cohen think big and deliver.
What happens when a CEO doesn’t have a plan to adapt his company’s business to changing macroeconomic conditions? Asking for a friend.
It is extremely difficult to link DEI initiatives to improved business results. ESG investing metrics follow the same subjective route. And while regulations, high taxes, etc. may have hurt Gamestop’s(GS) business results, the real villain is a business model that is outdated. In fact I am surprised that GS is still open, and there is still anything left to acquire.
There will be no turnaround. Sell the assets and move on.
Let’s not be naïve to government interference. DEI and other government regulations can strangle a business.
The business model is another question. Yet, if Barnes & Noble can reinvent itself then so can GameStop. To wit, every retailer must reinvent themselves to compete more effectively.
For some reason, the GameStop scenario calls to mind the Monty Python dead parrot sketch. If the “memers” hadn’t nailed GameStop to a stock trading perch, it would be pushing up the daisies. This business model is dead, just hasn’t fallen over quite yet.