After just six months in her role, GameStop CFO Cathy Smith has left the specialty retailer to take a position with Walmart.
Senior VP and chief accounting officer Robert Lloyd, a 14-year veteran of the company, will step in as interim CFO. "Rob has built and led a financial team that has spearheaded many measures to complete and integrate acquisitions, reduce operating costs and strengthen our position in long-term initiatives, while enhancing value and contributing to keeping GameStop competitive in the marketplace," says CEO Dan DeMatteo.
Most analysts believe that Smith's departure owed more to her desire to work at Walmart, a major chain retail corporation, than any inherent problems with GameStop --still, the change won't do any favors for the company's big picture.
"We view Ms. Smith’s departure with some caution given her short tenure at the company," notes Cowen Group analyst Doug Creutz.
Adds Janco Partners analyst Mike Hickey: "The resignation of their CFO does not go without significant pause, and compounds an already bearish grip on the Company's share prospects. "
"Apparently, Cathy has previously aspired to work at Walmart, and the significance of an executive position with the largest retailer in the world, was likely enticing," Hickey continues. "That said, her aggressive initial dedication to GameStop and the notable challenges a head, aggravates a sudden and unexpected departure."
Smith's move is unlikely to affect GameStop's current operational strategy, the analyst adds, nor will it affect Walmart's prospects in the used game business. The retailer has begun to investigate the used game segment, trying out rental kiosks in its stores (a program that apparently met with little success
) and beginning to offer used games for sale online
. Analysts have agreed Walmart is unlikely to meaningfully encroach on GameStop's share of the second-hand market in the near to mid-term.
But competitors are expected to get more aggressive this year, placing pressure on GameStop, says Hickey. The retailer's ongoing promotions -- such as a current promotion that offers an extra 50 percent credit on trade-ins -- can be chalked up to market weakness and low store traffic, the analyst adds.
"We acknowledge that a traditional hardware cycle would now be nearing completion, leaving further market growth dependent on continued and aggressive hardware price cuts, software price cuts, hardware extensions and an economic lift," Hickey concludes.