Strong Collectibles sales and a successful
Nintendo Switch launch drives a 2.3% increase in same store
sales
GameStop Corp. (NYSE:GME), a global family of specialty retail
brands that makes the most popular technologies affordable and
simple, today reported sales and earnings for the first quarter
ended April 29, 2017.
Paul Raines, chief executive officer, stated, “Our first quarter
results reflect the power of our leadership position within the
video game market and our ongoing diversification efforts.
Our international operations were particularly strong, driven by
robust sales of Nintendo Switch and Collectibles. Throughout 2017,
our focus will continue to be executing our diversification
strategy, exercising cost discipline and increasing our share in
the video game market.”
First Quarter ResultsTotal global sales
increased 3.8% to $2.05 billion, resulting in consolidated
comparable store sales growth of 2.3% (-2.4% in the U.S. and +17.1%
internationally). New hardware sales increased 24.6%, led by the
highly sought after Nintendo Switch. New software declined 8.2% due
to the tough overlap of a few key AAA titles launched last year.
Pre-owned sales declined 6.2%, in-line with the company’s
expectations.
Worldwide omnichannel sales increased by 92.9% as the company
leveraged all of its sales platforms (website, web-in-store,
pickup-at-store, ship-from-store, mobile) during the quarter to
promote and secure Nintendo Switch sales.
Digital sales grew 3.0% to $44.1 million, while non-GAAP digital
receipts declined 9.0% to $235.6 million. The growth in sales was
primarily driven by our Kongregate business. Digital receipts were
negatively impacted by lower sales of new consoles bundled with
digital software compared to last year.
Collectibles sales increased 39.1% to $114.5 million, driven by
strong global sales of Pokémon related products. The company added
nine Collectibles stores during the quarter, bringing the total
global portfolio to 95 stores.
Technology Brands sales, which are not included in comparable
store sales, increased 21.5% to $201.4 million, driven by the
year-over-year growth in our AT&T authorized retail stores.
Operating earnings were $11.1 million, impacted by $7.3 million of
charges related to the store closings announced last quarter.
Adjusted operating earnings declined 2.1% to $18.4 million compared
to the prior-year quarter.
GameStop’s first quarter net earnings were $59.0 million, or
$0.58 per diluted share, compared to net earnings of $65.8 million,
or $0.63 per diluted share in the prior-year quarter. The first
quarter results include charges of $7.3 million ($4.6 million, net
of tax), or $0.05 per diluted share, mentioned above.
Excluding these charges, GameStop's adjusted net earnings for
the first quarter were $63.6 million, compared to adjusted net
earnings of $68.4 million in the prior-year quarter. Adjusted
diluted earnings per share were $0.63 compared to adjusted diluted
earnings per share of $0.66 in the prior-year quarter.
A reconciliation of non-GAAP results, including adjusted net
income, operating earnings and Technology Brands operating earnings
to its closest GAAP measure is included with this release (Schedule
III).
Capital Allocation UpdateOn May 23, 2017,
GameStop’s board of directors declared a quarterly cash dividend of
$0.38 per common share payable on June 20, 2017 to shareholders of
record as of the close of business on June 7, 2017.
Earnings OutlookAs a reminder, GameStop is no
longer providing quarterly EPS or same store sales guidance. In
terms of annual guidance, the company is reiterating its full year
diluted earnings per share guidance of $3.10 to $3.40 and
comparable store sales range of -5.0% to 0.0%.
Conference Call InformationA conference call
with GameStop Corp.’s management is scheduled for May 25, 2017 at
4:00 p.m. CT to discuss the company’s financial results. The phone
number for the call is 888-437-9445 and the passcode is
9508071. This call, along with supplemental information, can
also be accessed at GameStop Corp.’s investor relations home page
at http://investor.GameStop.com/. The conference call will be
archived for two months on GameStop’s corporate website.
About GameStopGameStop Corp. (NYSE:GME), a
Fortune 500 company headquartered in Grapevine, Texas, is a
global, multichannel video game, consumer electronics and wireless
services retailer. GameStop operates more than 7,500
stores across 14 countries. The company's consumer product network
also includes www.gamestop.com; www.Kongregate.com, a
leading browser-based game site; Game Informer® magazine, the
world's leading print and digital video game publication; and
ThinkGeek, www.thinkgeek.com, the premier retailer for the
global geek community featuring exclusive and unique video game and
pop culture products. Our Technology Brands segment includes 1,508
Simply Mac, Spring Mobile AT&T and Cricket stores. Simply
Mac, www.simplymac.com, sells the full line
of Apple products, including laptops, tablets, and
smartphones and offers Apple certified warranty and
repair services. Spring Mobile, www.springmobile.com, sells
all of AT&T’s products and services, including DIRECTV and
offers pre-paid wireless services, devices and related accessories
through its Cricket branded stores in select markets in the U.S.
General information about GameStop Corp. can be obtained
at the company’s corporate website.Follow @GameStop and
@GameStopCorp. on Twitter and
find GameStop on Facebook at www.facebook.com/GameStop.
Non-GAAP MeasuresAs a supplement to our
financial results presented in accordance with U.S. generally
accepted accounting principles (GAAP), GameStop may use certain
non-GAAP measures, such as adjusted operating earnings, adjusted
net income, digital receipts and constant currency. We believe
these non-GAAP financial measures provide useful information to
investors in evaluating our core operating performance. GameStop
defines digital receipts as the full amount paid by the customer
for digital content at the time of sale and/or the value attributed
to digital content when physical and digital products are sold
combined. Results reported as constant currency exclude the impact
of fluctuations in foreign currency exchange rates by converting
our local currency financial results using the prior period
exchange rates and comparing these adjusted amounts to our current
period reported results. Our definition and calculation of non-GAAP
measures may differ from that of other companies. Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative for, the company's reported GAAP financial results.
Safe Harbor This presentation contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements may
include, but are not limited to, the outlook for fiscal 2017,
future financial and operating results and projections, projected
store openings, timing and terms of potential acquisitions, the
company's plans, objectives, expectations and intentions, and other
statements that are not historical facts. Such statements are based
upon the current beliefs and expectations of GameStop's management
and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking
statements. GameStop undertakes no obligation to publicly update or
revise any forward-looking statements. The following factors, among
others, could cause actual results to differ from those set forth
in the forward-looking statements: the inability to obtain
sufficient quantities of product to meet consumer demand, including
console hardware and accessories; the timing of release and
consumer demand for new and pre-owned video game titles; our
ability to continue to expand, and successfully open and operate
new stores for, our collectibles and tech brands businesses; risks
associated with achievement of anticipated financial and operating
results from acquisitions; our ability to sustain and grow our
console digital video game sales; the timing and amount of
recognition of tax attributes; the risks associated with
international operations, wireless industry partnerships and
operations and the completion and integration of acquisitions;
increased competition and changing technology in the video game
industry, including browser and mobile games and digital
distribution of console games, and the impact of that competition
and those changes on physical video game sales; the costs and
consequences of legal proceedings and tax audits; and changes in
domestic or foreign laws and regulations that reduce consumer
demand for, or increase prices of, our products or otherwise
adversely affect our business. Additional factors that could cause
GameStop's results to differ materially from those described in the
forward-looking statements can be found in GameStop's Annual Report
on Form 10-K for the fiscal year ended Jan. 28, 2017 filed with the
SEC and available at the SEC's Internet site at http://www.sec.gov
or http://investor.GameStop.com.
|
|
|
|
|
|
|
GameStop Corp. |
Condensed Consolidated Statements of
Operations |
(in millions, except per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
13 weeks |
|
|
13 weeks |
|
|
|
ended |
|
|
ended |
|
|
|
April 29, 2017 |
|
|
April 30, 2016 |
|
|
|
|
|
|
|
Net
sales |
|
$ |
2,045.9 |
|
|
$ |
1,971.5 |
|
Cost of
sales |
|
|
1,343.4 |
|
|
|
1,296.0 |
|
|
|
|
|
|
|
|
Gross
profit |
|
|
702.5 |
|
|
|
675.5 |
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
|
|
|
|
expenses |
|
|
563.5 |
|
|
|
520.8 |
|
Depreciation
and amortization |
|
|
37.9 |
|
|
|
40.7 |
|
|
|
|
|
|
|
|
Operating
earnings |
|
|
101.1 |
|
|
|
114.0 |
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
13.9 |
|
|
|
10.8 |
|
|
|
|
|
|
|
|
Earnings
before income tax expense |
|
|
87.2 |
|
|
|
103.2 |
|
|
|
|
|
|
|
|
Income tax
expense |
|
|
28.2 |
|
|
|
37.4 |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
59.0 |
|
|
$ |
65.8 |
|
|
|
|
|
|
|
|
Net income
per common share: |
|
|
|
|
|
|
Basic |
|
$ |
0.58 |
|
|
$ |
0.63 |
|
Diluted |
|
$ |
0.58 |
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
Dividends per
common share |
|
$ |
0.38 |
|
|
$ |
0.37 |
|
|
|
|
|
|
|
|
Weighted
average common shares |
|
|
|
|
|
|
outstanding: |
|
|
|
|
|
|
Basic |
|
|
101.3 |
|
|
|
103.8 |
|
Diluted |
|
|
101.4 |
|
|
|
104.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of
sales |
|
|
65.7 |
% |
|
|
65.7 |
% |
|
|
|
|
|
|
|
Gross
profit |
|
|
34.3 |
% |
|
|
34.3 |
% |
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
|
|
|
|
expenses |
|
|
27.5 |
% |
|
|
26.4 |
% |
Depreciation
and amortization |
|
|
1.9 |
% |
|
|
2.1 |
% |
|
|
|
|
|
|
|
Operating
earnings |
|
|
4.9 |
% |
|
|
5.8 |
% |
|
|
|
|
|
|
|
Interest
expense, net |
|
|
0.6 |
% |
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
before income tax expense |
|
|
4.3 |
% |
|
|
5.2 |
% |
|
|
|
|
|
|
|
Income tax
expense |
|
|
1.4 |
% |
|
|
1.9 |
% |
|
|
|
|
|
|
|
Net
income |
|
|
2.9 |
% |
|
|
3.3 |
% |
|
|
|
|
|
|
|
GameStop Corp. |
Condensed Consolidated Balance Sheets |
(in millions) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 29, |
|
|
April 30, |
|
2017 |
|
2016 |
ASSETS: |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
311.9 |
|
$ |
473.6 |
|
Receivables, net |
|
|
172.5 |
|
|
139.0 |
|
Merchandise
inventories, net |
|
|
1,216.9 |
|
|
1,264.1 |
|
Prepaid
expenses and other current assets |
|
|
145.7 |
|
|
160.4 |
|
|
Total current
assets |
|
|
1,847.0 |
|
|
2,037.1 |
|
|
|
|
|
|
|
|
|
Property
and equipment: |
|
|
|
|
|
|
|
|
Land |
|
|
|
18.6 |
|
|
18.2 |
|
Buildings
& leasehold improvements |
|
|
727.4 |
|
|
692.2 |
|
Fixtures
and equipment |
|
|
938.4 |
|
|
892.1 |
|
|
Total property and
equipment |
|
|
1,684.4 |
|
|
1,602.5 |
|
|
|
|
|
|
|
|
|
|
Less
accumulated depreciation and amortization |
|
|
1,230.8 |
|
|
1,119.2 |
|
|
Net property and
equipment |
|
|
453.6 |
|
|
483.3 |
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
1,724.9 |
|
|
1,493.0 |
Other
noncurrent assets |
|
|
|
657.9 |
|
|
432.6 |
|
|
Total assets |
|
$ |
4,683.4 |
|
$ |
4,446.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
526.1 |
|
$ |
608.5 |
|
Accrued
liabilities |
|
|
845.4 |
|
|
707.4 |
|
Income
taxes payable |
|
|
94.1 |
|
|
50.1 |
|
|
Total current
liabilities |
|
|
1,465.6 |
|
|
1,366.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
long-term liabilities |
|
|
|
133.2 |
|
|
111.5 |
Long-term
debt |
|
|
|
815.7 |
|
|
812.4 |
|
|
Total liabilities |
|
|
2,414.5 |
|
|
2,289.9 |
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
2,268.9 |
|
|
2,156.1 |
Total liabilities and stockholders' equity |
|
$ |
4,683.4 |
|
$ |
4,446.0 |
|
|
|
|
|
GameStop Corp. |
|
|
|
|
|
|
|
|
|
|
|
Schedule I |
Sales Mix |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
|
13 Weeks Ended |
|
|
|
April 29, 2017 |
|
|
|
April 30, 2016 |
|
|
|
Net |
|
Percent |
|
|
|
Net |
|
Percent |
|
|
|
Sales |
|
of Total |
|
|
|
Sales |
|
of Total |
Net Sales (in
millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game
hardware |
|
$ |
389.9 |
|
19.1 |
% |
|
|
$ |
312.9 |
|
15.9 |
% |
New video game
software |
|
|
520.5 |
|
25.4 |
% |
|
|
|
567.2 |
|
28.8 |
% |
Pre-owned and value
video game products |
|
|
526.2 |
|
25.7 |
% |
|
|
|
560.9 |
|
28.5 |
% |
Video game
accessories |
|
|
176.1 |
|
8.6 |
% |
|
|
|
162.7 |
|
8.2 |
% |
Digital |
|
|
44.1 |
|
2.2 |
% |
|
|
|
42.8 |
|
2.2 |
% |
Technology Brands |
|
|
201.4 |
|
9.8 |
% |
|
|
|
165.8 |
|
8.4 |
% |
Collectibles |
|
|
114.5 |
|
5.6 |
% |
|
|
|
82.3 |
|
4.2 |
% |
Other |
|
|
73.2 |
|
3.6 |
% |
|
|
|
76.9 |
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,045.9 |
|
100.0 |
% |
|
|
$ |
1,971.5 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule II |
Gross Profit Mix |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
|
13 Weeks Ended |
|
|
|
April 29, 2017 |
|
|
|
April 30, 2016 |
|
|
|
|
|
Gross |
|
|
|
|
|
Gross |
|
|
|
Gross |
|
Profit |
|
|
|
Gross |
|
Profit |
|
|
|
Profit |
|
Percent |
|
|
|
Profit |
|
Percent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit (in
millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game
hardware |
|
$ |
38.1 |
|
9.8 |
% |
|
|
$ |
28.3 |
|
9.0 |
% |
New video game
software |
|
|
113.7 |
|
21.8 |
% |
|
|
|
127.9 |
|
22.5 |
% |
Pre-owned and value
video game products |
|
|
253.7 |
|
48.2 |
% |
|
|
|
263.2 |
|
46.9 |
% |
Video game
accessories |
|
|
55.9 |
|
31.7 |
% |
|
|
|
57.1 |
|
35.1 |
% |
Digital |
|
|
36.1 |
|
81.9 |
% |
|
|
|
37.0 |
|
86.4 |
% |
Technology Brands |
|
|
144.6 |
|
71.8 |
% |
|
|
|
109.7 |
|
66.2 |
% |
Collectibles |
|
|
35.2 |
|
30.7 |
% |
|
|
|
28.6 |
|
34.8 |
% |
Other |
|
|
25.2 |
|
34.4 |
% |
|
|
|
23.7 |
|
30.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
702.5 |
|
34.3 |
% |
|
|
$ |
675.5 |
|
34.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
GameStop Corp. |
Schedule III |
($ in millions) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results: |
|
|
|
|
|
The following table reconciles the Company's operating earnings,
net income and earnings per share as presented in its unaudited
consolidated statements of operations and prepared in accordance
with GAAP to its adjusted operating earnings, net income and
earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
Apr. 29, 2017 |
|
Apr. 30, 2016 |
Technology
Brands Adjusted Operating Earnings |
|
|
|
|
Technology Brands
operating earnings |
|
|
11.1 |
|
|
|
18.8 |
|
Store
closure costs |
|
|
7.3 |
|
|
|
- |
|
Technology Brands adjusted operating earnings |
|
$ |
18.4 |
|
|
$ |
18.8 |
|
|
|
|
|
|
Consolidated
Adjusted Operating Earnings |
|
|
|
|
Operating earnings |
|
|
101.1 |
|
|
|
114.0 |
|
Store
closure costs |
|
|
7.3 |
|
|
|
- |
|
Business
divestitures and other |
|
|
- |
|
|
|
4.1 |
|
Adjusted
operating earnings |
|
$ |
108.4 |
|
|
$ |
118.1 |
|
|
|
|
|
|
Consolidated
Adjusted Net Income |
|
|
|
|
Net Income |
|
$ |
59.0 |
|
|
$ |
65.8 |
|
Store
closure costs |
|
|
7.3 |
|
|
|
- |
|
Business
divestitures and other |
|
|
- |
|
|
|
4.1 |
|
Tax
effect of non-GAAP adjustments |
|
|
(2.7 |
) |
|
|
(1.5 |
) |
Adjusted
net income |
|
$ |
63.6 |
|
|
$ |
68.4 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Earnings Per Share |
|
|
|
|
Basic |
|
$ |
0.63 |
|
|
$ |
0.66 |
|
Diluted |
|
$ |
0.63 |
|
|
$ |
0.66 |
|
|
|
|
|
|
Numbers of shares used
in adjusted calculation |
|
|
|
|
Basic |
|
|
101.3 |
|
|
|
103.8 |
|
Diluted |
|
|
101.4 |
|
|
|
104.2 |
|
|
|
|
|
|
Contact
Matt Hodges
Vice President, Corporate Communications
GameStop Corp.
(817) 424-2130
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