PITTSBURGH, May 20, 2020 /PRNewswire/ -- Hestia Capital
Partners LP, Permit Capital Enterprise Fund, L.P. and their
affiliates (the "Investor Group"), who beneficially own
approximately 7.2% of the outstanding common stock of GameStop
Corp. ("GameStop" or the "Company") (NYSE: GME), announced today
that they have issued a detailed investor presentation titled "More
Change Is Needed". The Investor Group has nominated two highly
qualified directors, Paul J. Evans
and Kurtis J. Wolf, for election to
GameStop's 2020 Annual Meeting scheduled for June 12, 2020.
The full investor presentation can be found here:
https://www.restoregamestop.com/presentation
The Investor Group encourages its fellow stockholders to read
the presentation, as well as its proxy materials and stockholder
letters, which are accessible at www.RestoreGameStop.com.
Highlights from the investor presentation include the
following:
Reasons for why stockholders should vote for more change at
GameStop:
- Despite being a valuable business with significant competitive
advantages in the game retailing industry, GameStop's Board has
overseen $2.5 billion in stockholder
value destruction, underperforming its proxy peers on key
financial and operational metrics, including total shareholder
returns on a one, three, five and ten year period.
- In March 2019, the Investor Group
entered into a Cooperation Agreement to add two new directors to an
expanded Board of 11 members, including Lizabeth Dunn, the Investor Group's
nominee.
- Since then, the Company's performance has continued to
deteriorate.
-
- The stock price declined 65% in fiscal 2019.
- Revenue declined from $3.1
billion in the fourth quarter of fiscal 2018 to $2.2 billion in fourth quarter of fiscal
2019.
- Senior Notes due March 2021,
which traded at par 12 months ago, traded at 74 cents on the dollar as of May 15, 2020.
- Short interest has increased from roughly 40% when the
Cooperation Agreement was signed to roughly 100% over the past
14 months, suggesting great pessimism about GameStop's future.
- Adjusted SG&A as a percent of revenue has increased from
23.9% in fiscal 2018 to 28.6% in fiscal 2019.
- The Tulsa market test has not produced any actionable
intelligence, even before Covid-19.
- Despite this performance, the Board and management have been
compensated as if the stock was a top performer, receiving
$38 million in compensation in fiscal
2019, or approximately 15% of the Company's market cap at the end
of fiscal 2019.
- GameStop's response to Covid-19 has been slow and its
communications to employees created confusion and fear.
-
- GameStop was among the last in its proxy peer group to close
its stores, allegedly telling its employees that it was an
"essential business" and seemingly only closed its stores in
response to public outcry.
- GameStop was near last among its proxy peers to reduce its
executive compensation.
- The Board's recent refreshment is not enough to drive the
change that is needed
-
- Fourteen months ago, the Investor Group highlighted the need
for gaming, turnaround, and stockholder representation on the
Board.
- While the Board has done two refreshments in 2019 and 2020,
they remain too retail-centric and have not addressed the need for
turnaround and stockholder representation.
- 2 long-tenured directors, who plan to retire next year, have
irrelevant skillsets, minimal ownership and a track record of being
ineffective.
Kurt Wolf and Paul Evans will advocate for stockholders in the
boardroom and will move swiftly to conduct a full and fair
evaluation of GameStop's operations and capital structure to
maximize value.
If elected, the nominees have the following priorities:
- Aggressively reduce SG&A
- Address the Company's liquidity concerns
- Articulate a long-term, viable strategy
- Better align compensation with performance
- Establish a corporate culture which values all
stakeholders.
The Investor Group urges stockholders to support its call for
change at the Company by voting the WHITE proxy to elect its
slate of two experienced nominees, Paul J.
Evans and Kurtis J. Wolf, at
the 2020 Annual Meeting.
If you have any questions about how to vote, the Investor
Group's proxy solicitor Saratoga Proxy Consulting can be reached at
info@saratogaproxy.com or (888) 368-0379.
About Hestia Capital
Hestia Capital is a long term focused, deep value investment
firm that typically makes long-term investments in a narrow
selection of companies facing company-specific, and/or industry,
disruptions. Hestia seeks to leverage its General Partner's
expertise in competitive strategy and capital markets to identify
attractive situations within this universe of disrupted companies.
These companies are often misunderstood by the general investing
community and provide the 'price dislocations' which allows Hestia
to identify, and invest in, highly attractive risk/reward
investment opportunities.
About Permit Capital Enterprise Fund
The Permit Capital Enterprise Fund, through its management
company, follows an investing philosophy that seeks to identify
securities trading at a discount to intrinsic value. The investment
approach is bottom-up and focused on the valuation of the
securities of individual issuers. The management company's
assessment of intrinsic value is based on its own fundamental
research as well as numerous sources of publicly available
information.
Contacts:
Kurt Wolf at 724-687-7842
John Broderick at 610-941-5025
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SOURCE Hestia Capital Management, LLC & Permit Capital
Enterprise Fund, L.P.