3 reasons why executives are leaving retailers from GameStop to Gap
Shoppers explore a mostly empty mall in Columbus, Ohio.
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Don’t expect the stream of departures from retailers’ C-suites to stop anytime soon.
Already this year, Gap and Bed Bath & Beyond abruptly replaced their CEOs as the companies’ sales plunged. GameStop fired its chief financial officer in the middle of the video game retailer’s efforts to revamp its business. After sticking around to help Dollar General navigate the pandemic, the company’s longtime CEO said he was retiring.
As the retail sector stares down an increasingly challenging landscape, experts say executive shakeups will likely become more common. Stimulus spending that boosted sales during the pandemic will no longer mask any underlying business struggles. Surging inflation is raising worries that shoppers will pull back on spending. And after the strain of the past two years, some executives are ready for a change of pace.
“Retail CEOs are going to have to earn their seats and earn their money, because their jobs just got a lot harder in the last six months,” said John San Marco, a senior research analyst covering the retail industry at Neuberger Berman.
What’s driving the exodus of retail executives
With the retail industry facing growing challenges, the exodus of executives likely won’t stop anytime soon
Scrutiny from activist investors is one reason executives could find themselves out of a job.
Company boards are also holding executives accountable for poor performance.
In some cases, longtime executives are retiring after pandemic burnout.
Wall Street is becoming wary of the retail industry too as the economic backdrop gets choppier. Shares of the S&P Retail exchange-traded fund are down about 30% so far this year, worse than the S&P 500’s 18% decline over the same time.
As pressure builds for retail executives to drive growth, there’s a greater probability they’ll disappoint boards and shareholders and be shown the door, San Marco said. In other cases, executives might see the writing on the wall and want to leave while they’re still riding high.
Here are three reasons executives across the industry could be looking for a new job in coming months.
1. Activist heat
Some executive shakeups are the culmination of intense scrutiny from activist investors.
“If your stock price has plummeted, if your market value is less than your revenue, you’re going to be a target for activists,” said Catherine Lepard, a partner in the retail practice at Heidrick & Struggles, which helps company boards with succession planning and executive searches.
A Bed Bath & Beyond store is seen on June 29, 2022 in Miami, Florida.
Joe Raedle | Getty Images News | Getty Images
Bed Bath & Beyond, for example, became the target of Chewy co-founder Ryan Cohen, whose RC Ventures amassed a nearly 10% stake in the company. Cohen pushed for changes, including spinning off or selling the company’s baby goods chain and slashing pay for CEO Mark Tritton.
About three months later, Tritton got pushed out…
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