GameStop Investors Threaten Proxy Battle Over ‘Stale Board’

March 14, 2019, 1:23 PM UTC

GameStop is dealing with a host of problems in its business. And now, it’s facing the wrath of two major shareholders.

In a letter to the GameStop board, Permit Capital Enterprise Fund and Hestia Capital Partners, which together own 1.3% of GameStop, said that the company needs to replace its “stale board” and increase stock buybacks to return more value to shareholders, according to The Wall Street Journal, which obtained a copy of the letter. They shared concerns that GameStop isn’t doing enough to compete in the hotly contested retail market.

“Surveying the last five years, we struggle to identify any significant steps the company has taken—besides the introduction of collectibles—to adapt to disruptive dynamics in its core business,” the investors wrote, according to the Journal.

GameStop has found itself in increasingly troubled waters. Video game players, which have historically been the lifeblood of GameStop’s business, now have many more places to buy games and are increasingly turning to digital copies they can buy on consoles, cutting GameStop out of the purchasing equation. Even among players who buy physical game copies and hardware, online retailers like Amazon and others continue to be a drag on GameStop’s business.

In response, GameStop has transitioned its business to add more collectibles, used cell phones, and other products to its stores. In its last fiscal quarter ended November, GameStop sales rose nearly 5% to $2 billion, but its losses widened to $488.6 million.

While those issues have been enough to scare investors, GameStop also sought potential suitors last year. The company’s executives ultimately abandoned the plan after announcing that no suitable buyers for GameStop’s business had come along.

In their letter, Permit Capital Enterprise Fund and Hestia Capital Partners called GameStop’s inability to find a buyer “a failure.” They added that it’s illustrative that “change is needed.”

The investors have until March 28 to nominate new directors to the GameStop board. GameStop is expected to hold its annual shareholder meeting, where those directors could be appointed to the board, in June.

GameStop did not immediately respond to a Fortune request for comment.