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GameStop Finance Chief Resigns to Join Wal-Mart

Thursday, 25 Feb 2010 10:28 AM

Shares of GameStop Corp. tumbled in premarket trading Thursday after the video game retailer said its chief financial officer resigned after just six months on the job.

Catherine R. Smith had joined the Grapevine, Texas, company in August 2009, replacing founding executive David Carlson. Late Wednesday, GameStop said Smith was leaving the company for a job at Wal-Mart's international business.

GameStop appointed chief accounting officer Robert Lloyd as CFO on an interim basis. Lloyd has been with GameStop for 14 years.

"With the company losing its second CFO in the last six months, while facing a challenging environment in the short term as well as potential long-term headwinds, we believe that it's best to remain on the sidelines," said BMO Capital Markets analyst Edward Williams in a research note Thursday. He maintained his "Market Perform" rating.

Still, he said Lloyd's experience would make the transition to another CFO smooth.

Williams cut his earnings expectations for the fiscal year ending in January 2011 on expectations for lower gross margins in GameStop's used video game business as the company increased promotions, and for lower sales of new software.

GameStop had said in January that its holiday video game sales were disappointing, with sales at stores open more than a year dropping 8.6 percent in the nine weeks ended Jan. 2 compared with the year-ago period.

Sales at stores open at least a year are a key measure of a retailer's health because it measures growth from existing stores rather than newly opened ones.

GameStop shares were down $1.05, or 5.6 percent, at $17.81 in premarket activity Thursday. The stock has ranged from $18.27 to $32.82 over the past year.

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