GameStop Corp. (NYSE: GME) (“GameStop” or the “Company”) today
released financial results for the second quarter ended July 31,
2021. The Company’s condensed and consolidated financial
statements, including GAAP and non-GAAP results, are below. The
Company’s Form 10-Q and supplemental information can be found at
http://investor.GameStop.com.
SECOND QUARTER OVERVIEW
- Generated net sales of $1.183 billion, compared to $942 million
in the prior year’s second quarter.
- Ended the period with cash and
restricted cash of $1.78 billion.
- Ended the period with no long-term
debt, other than a $47.5 million low-interest loan associated with
the French government’s pandemic response.
- Invested in long-term growth
initiatives that include expanding the Company’s product catalog,
enhancing its fulfillment network capabilities and technology, and
adding talent across the organization.
- Entered into a lease of a new
530,000 square foot fulfillment center in Reno, Nevada, positioning
the Company’s fulfillment network to span both coasts of the
continental U.S.
- Entered into a lease of a new
customer care center in Pembroke Pines, Florida and started
building out U.S.-based customer care operations.
WEBCAST AND CONFERENCE CALL
INFORMATION
A webcast with management is scheduled for
September 8, 2021, at 5:00 p.m. ET to discuss the Company’s second
quarter activities and financial results. This call, along with
supplemental information, can also be accessed at
http://investor.GameStop.com. The phone number for the call is
877-451-6152 and the confirmation code is 13722703. This webcast
will be archived for two months on GameStop’s investor relations
website.
NON-GAAP MEASURES AND OTHER METRICS
As a supplement to the Company’s financial
results presented in accordance with U.S. generally accepted
accounting principles (GAAP), GameStop may use certain non-GAAP
measures, such as adjusted SG&A, adjusted operating income
(loss), adjusted net income (loss), adjusted diluted earnings
(loss) per share, adjusted EBITDA and free cash flow. The Company
believes these non-GAAP financial measures provide useful
information to investors in evaluating the Company’s core operating
performance. Adjusted selling, general and administrative expenses
(“Adjusted SG&A”), adjusted operating income (loss), adjusted
net income (loss) and adjusted diluted earnings (loss) per share
exclude the effect of items such as transformation costs, asset
impairments, store closure costs, severance, as well as divestiture
costs. Results reported as constant currency exclude the impact of
fluctuations in foreign currency exchange rates by converting the
Company’s local currency financial results using the prior period
exchange rates and comparing these adjusted amounts to the
Company’s current period reported results. The Company’s definition
and calculation of non-GAAP financial measures may differ from that
of other companies. Non-GAAP financial measures should be viewed as
supplementing, and not as an alternative or substitute for, the
Company’s financial results prepared in accordance with GAAP.
Certain of the items that may be excluded or included in non-GAAP
financial measures may be significant items that could impact the
Company’s financial position, results of operations or cash flows
and should therefore be considered in assessing the Company’s
actual and future financial condition and performance.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS - SAFE HARBOR
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements are based upon management’s
current beliefs, views, estimates and expectations, including as to
the Company’s industry, business strategy, goals and expectations
concerning its market position, strategic and transformation
initiatives, future operations, margins, profitability, sales
growth, capital expenditures, liquidity, capital resources,
expansion of technology expertise, and other financial and
operating information, including expectations as to future
operating profit improvement. Such statements include without
limitation those about the Company’s expectations for fiscal 2021,
future financial and operating results, projections and other
statements that are not historical facts. Forward-looking
statements are subject to significant risks and uncertainties and
actual developments, business decisions, outcomes and results may
differ materially from those reflected or described in the
forward-looking statements. The following factors, among others,
could cause actual developments, business decisions, outcomes and
results to differ materially from those reflected or described in
the forward-looking statements: macroeconomic pressures, including
the effects of the COVID-19 pandemic on consumer spending and the
Company’s ability to keep stores open; the impact of the COVID-19
pandemic on the Company’s business and financial results; the
economic conditions in the U.S. and certain international markets;
the amounts devoted to strategic investments, including in
ecommerce capabilities and other business transformation
initiatives, and failure to achieve anticipated profitability
increases and benefits from such initiatives within the expected
time-frames or at all; the cyclicality of the video game industry;
the Company’s dependence on the timely delivery of new and
innovative products from its vendors; the impact of technological
advances in the video game industry and related changes in consumer
behavior on the Company’s sales; the Company’s ability to keep pace
with changing industry technology and consumer preferences;
decrease in popularity of certain types of video games; the
Company’s ability to react to trends in pop culture with regard to
its sales of collectibles and dependence on licensed products for a
substantial portion of such sales; the competitive nature of the
Company’s industry, including competition from mass retailers,
ecommerce businesses, and traditional store-based retailers; the
ability and willingness of the Company’s vendors to provide
marketing and merchandise support at historical or anticipated
levels; the Company’s ability to attract and retain executive
officers and other key personnel; the Company’s ability to obtain
favorable terms from its current and future suppliers and vendors,
including those engaged as part of the Company’s shift to ecommerce
sales; the international nature of the Company’s business; foreign
currency fluctuations; changes in the Company’s global tax rate;
the impact of international crises and trade restrictions and
tariffs on the delivery of the Company’s products; the Company’s
dependence on sales during the holiday selling season; fluctuations
in the Company’s results of operations from quarter to quarter; the
Company’s ability to de-densify its global store base; the
Company’s ability to renew, terminate or enter into new leases on
favorable terms; the adequacy of the Company’s management
information systems; the Company’s reliance on centralized
facilities for refurbishment of its pre-owned products; the
Company’s ability to maintain security of its customer, employee or
company information; potential harm to the Company’s reputation,
including from cybersecurity breaches; the Company’s ability to
maintain effective control over financial reporting; restrictions
on the Company’s ability to purchase and sell pre-owned video
games; potential future litigation and other legal proceedings;
changes in accounting rules and regulations; and the Company’s
ability to comply with federal, state, local and international law.
Additional factors that could cause results to differ materially
from those reflected or described in the forward-looking statements
can be found in GameStop's Annual Report on Form 10-K for the
fiscal year ended January 30, 2021 and other filings made from time
to time with the SEC and available at the SEC's Internet site at
http://www.sec.gov or http://investor.GameStop.com. Forward-looking
statements contained in this press release speak only as of the
date of this press release. The Company undertakes no obligation to
publicly update any forward-looking statement, whether as a result
of new information, future developments or otherwise, except as may
be required by any applicable securities laws.
GameStop
Corp.Condensed Consolidated Statements of
Operations(in millions, except per share
data)(unaudited)
|
|
13 Weeks Ended July 31, 2021 |
|
13 Weeks Ended August 1, 2020 |
Net sales |
|
$ |
1,183.4 |
|
|
|
$ |
942.0 |
|
|
Cost of sales |
|
862.5 |
|
|
|
689.8 |
|
|
Gross profit |
|
320.9 |
|
|
|
252.2 |
|
|
Selling, general and
administrative expenses |
|
378.9 |
|
|
|
348.2 |
|
|
Asset impairments |
|
— |
|
|
|
0.9 |
|
|
Gain on sale of assets |
|
— |
|
|
|
(11.3 |
) |
|
Operating loss |
|
(58.0 |
) |
|
|
(85.6 |
) |
|
Interest expense, net |
|
0.5 |
|
|
|
7.5 |
|
|
Loss from continuing
operations before income taxes |
|
(58.5 |
) |
|
|
(93.1 |
) |
|
Income tax expense |
|
3.1 |
|
|
|
17.9 |
|
|
Net loss from continuing
operations |
|
(61.6 |
) |
|
|
(111.0 |
) |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
|
(0.3 |
) |
|
Net loss |
|
$ |
(61.6 |
) |
|
|
$ |
(111.3 |
) |
|
|
|
|
|
|
Basic loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(0.85 |
) |
|
|
$ |
(1.71 |
) |
|
Discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
Basic loss per share |
|
$ |
(0.85 |
) |
|
|
$ |
(1.71 |
) |
|
|
|
|
|
|
Diluted loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(0.85 |
) |
|
|
$ |
(1.71 |
) |
|
Discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
Diluted loss per share |
|
$ |
(0.85 |
) |
|
|
$ |
(1.71 |
) |
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
|
72.6 |
|
|
|
65.0 |
|
|
Diluted |
|
72.6 |
|
|
|
65.0 |
|
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
|
% |
|
100.0 |
|
% |
Cost of sales |
|
72.9 |
|
|
|
73.2 |
|
|
Gross profit |
|
27.1 |
|
|
|
26.8 |
|
|
Selling, general and
administrative expenses |
|
32.0 |
|
|
|
37.0 |
|
|
Asset impairments |
|
— |
|
|
|
0.1 |
|
|
Gain on sale of assets |
|
— |
|
|
|
(1.2 |
) |
|
Operating loss |
|
(4.9 |
) |
|
|
(9.1 |
) |
|
Interest expense, net |
|
— |
|
|
|
0.8 |
|
|
Loss from continuing
operations before income taxes |
|
(4.9 |
) |
|
|
(9.9 |
) |
|
Income tax expense |
|
0.3 |
|
|
|
1.9 |
|
|
Net loss from continuing
operations |
|
(5.2 |
) |
|
|
(11.8 |
) |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
|
— |
|
|
Net loss |
|
(5.2 |
) |
% |
|
(11.8 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended July 31, 2021 |
|
26 Weeks Ended August 1, 2020 |
Net sales |
|
$ |
2,460.2 |
|
|
|
$ |
1,963.0 |
|
|
Cost of sales |
|
1,809.2 |
|
|
|
1,428.4 |
|
|
Gross profit |
|
651.0 |
|
|
|
534.6 |
|
|
Selling, general and
administrative expenses |
|
749.2 |
|
|
|
734.7 |
|
|
Asset impairments |
|
0.6 |
|
|
|
4.8 |
|
|
Gain on sale of assets |
|
— |
|
|
|
(11.3 |
) |
|
Operating loss |
|
(98.8 |
) |
|
|
(193.6 |
) |
|
Interest expense, net |
|
25.2 |
|
|
|
14.2 |
|
|
Loss from continuing
operations before income taxes |
|
(124.0 |
) |
|
|
(207.8 |
) |
|
Income tax expense
(benefit) |
|
4.4 |
|
|
|
68.3 |
|
|
Net loss from continuing
operations |
|
(128.4 |
) |
|
|
(276.1 |
) |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
|
(0.9 |
) |
|
Net loss |
|
$ |
(128.4 |
) |
|
|
$ |
(277.0 |
) |
|
|
|
|
|
|
Basic loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(1.85 |
) |
|
|
$ |
(4.26 |
) |
|
Discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
Basic loss per share |
|
$ |
(1.85 |
) |
|
|
$ |
(4.28 |
) |
|
|
|
|
|
|
Diluted loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(1.85 |
) |
|
|
$ |
(4.26 |
) |
|
Discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
Diluted loss per share |
|
$ |
(1.85 |
) |
|
|
$ |
(4.28 |
) |
|
|
|
|
|
|
Dividends per common
share |
|
$ |
— |
|
|
|
$ |
— |
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
|
69.3 |
|
|
|
64.7 |
|
|
Diluted |
|
69.3 |
|
|
|
64.7 |
|
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
|
% |
|
100.0 |
|
% |
Cost of sales |
|
73.5 |
|
|
|
72.8 |
|
|
Gross profit |
|
26.5 |
|
|
|
27.2 |
|
|
Selling, general and
administrative expenses |
|
30.5 |
|
|
|
37.5 |
|
|
Asset impairments |
|
— |
|
|
|
0.2 |
|
|
Gain on sale of assets |
|
— |
|
|
|
(0.6 |
) |
|
Operating loss |
|
(4.0 |
) |
|
|
(9.9 |
) |
|
Interest expense, net |
|
1.0 |
|
|
|
0.7 |
|
|
Loss from continuing
operations before income taxes |
|
(5.0 |
) |
|
|
(10.6 |
) |
|
Income tax expense
(benefit) |
|
0.2 |
|
|
|
3.5 |
|
|
Net loss from continuing
operations |
|
(5.2 |
) |
|
|
(14.1 |
) |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
|
— |
|
|
Net loss |
|
(5.2 |
) |
% |
|
(14.1 |
) |
% |
|
|
|
|
|
GameStop
Corp.Condensed Consolidated Balance
Sheets(in
millions)(unaudited)
|
|
July 31, 2021 |
|
August 1, 2020 |
ASSETS: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,720.4 |
|
|
$ |
735.1 |
|
Restricted cash |
|
36.7 |
|
|
11.0 |
|
Receivables, net |
|
68.5 |
|
|
83.1 |
|
Merchandise inventories |
|
596.4 |
|
|
474.6 |
|
Prepaid expenses and other
current assets |
|
235.0 |
|
|
76.1 |
|
Total current assets |
|
2,657.0 |
|
|
1,379.9 |
|
Property and equipment,
net |
|
186.6 |
|
|
219.7 |
|
Operating lease right-of-use
assets |
|
645.2 |
|
|
689.0 |
|
Deferred income taxes |
|
— |
|
|
29.2 |
|
Long-term restricted cash |
|
18.5 |
|
|
12.5 |
|
Other noncurrent assets |
|
38.5 |
|
|
44.9 |
|
Total assets |
|
$ |
3,545.8 |
|
|
$ |
2,375.2 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
409.7 |
|
|
$ |
256.4 |
|
Accrued liabilities and other
current liabilities |
|
563.1 |
|
|
580.7 |
|
Current portion of operating
lease liabilities |
|
221.5 |
|
|
218.8 |
|
Short-term debt, including
current portion of long-term debt, net |
|
— |
|
|
221.3 |
|
Borrowings under revolving
line of credit |
|
— |
|
|
35.0 |
|
Total current liabilities |
|
1,194.3 |
|
|
1,312.2 |
|
Long-term debt, net |
|
47.5 |
|
|
215.9 |
|
Operating lease
liabilities |
|
432.0 |
|
|
475.5 |
|
Other long-term
liabilities |
|
20.0 |
|
|
19.3 |
|
Total liabilities |
|
1,693.8 |
|
|
2,022.9 |
|
Total stockholders’
equity |
|
1,852.0 |
|
|
352.3 |
|
Total liabilities and
stockholders’ equity |
|
$ |
3,545.8 |
|
|
$ |
2,375.2 |
|
|
|
|
|
|
GameStop
Corp.Condensed Consolidated Statements of Cash
Flows(in
millions)(unaudited)
|
|
13 Weeks Ended July 31, 2021 |
|
13 Weeks Ended August 1, 2020 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(61.6 |
) |
|
$ |
(111.3 |
) |
Adjustments to reconcile net
(loss) income to net cash flows from operating activities: |
|
|
|
|
Depreciation and amortization
(including amounts in cost of sales) |
|
17.6 |
|
|
20.2 |
|
Loss (gain) on retirement of
debt |
|
— |
|
|
(0.8 |
) |
Asset impairments |
|
— |
|
|
0.9 |
|
Stock-based compensation
expense |
|
8.8 |
|
|
2.1 |
|
Loss (gain) on disposal of
property and equipment, net |
|
0.1 |
|
|
(9.9 |
) |
Other |
|
(0.1 |
) |
|
0.1 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
Receivables, net |
|
33.1 |
|
|
6.1 |
|
Merchandise inventories |
|
(31.2 |
) |
|
198.2 |
|
Prepaid expenses and other
current assets |
|
(1.1 |
) |
|
(4.1 |
) |
Prepaid income taxes and
income taxes payable |
|
(12.6 |
) |
|
47.5 |
|
Accounts payable and accrued
liabilities |
|
36.6 |
|
|
80.4 |
|
Operating lease right-of-use
assets and liabilities |
|
(1.1 |
) |
|
(36.0 |
) |
Changes in other long-term
liabilities |
|
— |
|
|
(0.6 |
) |
Net cash flows (used in)
provided by operating activities |
|
(11.5 |
) |
|
192.8 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and
equipment |
|
(13.5 |
) |
|
(10.9 |
) |
Proceeds from sale of property
and equipment |
|
— |
|
|
51.8 |
|
Other |
|
(0.1 |
) |
|
1.2 |
|
Net cash flows (used in)
provided by investing activities |
|
(13.6 |
) |
|
42.1 |
|
Cash flows from financing
activities: |
|
|
|
|
Proceeds from issuance of
common stock, net of cost |
|
1,121.1 |
|
|
— |
|
Proceeds from French term
loans |
|
— |
|
|
23.6 |
|
Repayments of revolver
borrowings |
|
— |
|
|
(100.0 |
) |
Repayments of senior
notes |
|
— |
|
|
(3.0 |
) |
Settlement of stock-based
awards |
|
(86.7 |
) |
|
(0.5 |
) |
Net cash flows provided by
(used in) financing activities |
|
1,034.4 |
|
|
(79.9 |
) |
Exchange rate effect on cash,
cash equivalents and restricted cash |
|
(4.5 |
) |
|
19.7 |
|
Increase in cash, cash
equivalents and restricted cash |
|
1,004.8 |
|
|
174.7 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
770.8 |
|
|
583.9 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
1,775.6 |
|
|
758.6 |
|
|
|
|
|
|
GameStop
Corp.Condensed Consolidated Statements of Cash
Flows(in
millions)(unaudited)
|
|
26 Weeks Ended July 31, 2021 |
|
26 Weeks Ended August 1, 2020 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(128.4 |
) |
|
$ |
(277.0 |
) |
Adjustments to reconcile net
loss to net cash flows from operating activities: |
|
|
|
|
Depreciation and amortization
(including amounts in cost of sales) |
|
36.3 |
|
|
41.7 |
|
Loss (gain) on retirement of
debt |
|
18.2 |
|
|
(1.5 |
) |
Asset impairments |
|
0.6 |
|
|
4.8 |
|
Stock-based compensation
expense |
|
14.5 |
|
|
3.9 |
|
Deferred income taxes |
|
— |
|
|
45.4 |
|
Loss (gain) on disposal of
property and equipment, net |
|
0.5 |
|
|
(9.6 |
) |
Other, net |
|
(0.6 |
) |
|
1.3 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
Receivables, net |
|
36.2 |
|
|
60.5 |
|
Merchandise inventories |
|
1.2 |
|
|
394.2 |
|
Prepaid expenses and other
current assets |
|
(4.0 |
) |
|
1.7 |
|
Prepaid income taxes and
income taxes payable |
|
(13.8 |
) |
|
69.8 |
|
Accounts payable and accrued
liabilities |
|
25.2 |
|
|
(193.7 |
) |
Operating lease right-of-use
assets and liabilities |
|
(16.1 |
) |
|
2.8 |
|
Changes in other long-term
liabilities |
|
(0.1 |
) |
|
(0.8 |
) |
Net cash flows (used in)
provided by operating activities |
|
(30.3 |
) |
|
143.5 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and
equipment |
|
(28.2 |
) |
|
(17.5 |
) |
Proceeds from sale of property
and equipment |
|
— |
|
|
51.8 |
|
Other |
|
(0.1 |
) |
|
1.7 |
|
Net cash flows (used in)
provided by investing activities |
|
(28.3 |
) |
|
36.0 |
|
Cash flows from financing
activities: |
|
|
|
|
Proceeds from issuance of
common stock, net of cost |
|
1,672.8 |
|
|
— |
|
Proceeds from French term
loans |
|
— |
|
|
23.6 |
|
Borrowings from the
revolver |
|
— |
|
|
150.0 |
|
Repayments of revolver
borrowings |
|
(25.0 |
) |
|
(115.0 |
) |
Payments of senior notes |
|
(307.4 |
) |
|
(5.3 |
) |
Settlement of stock-based
awards |
|
(136.6 |
) |
|
(1.0 |
) |
Other |
|
(0.1 |
) |
|
(0.3 |
) |
Net cash flows provided by
financing activities |
|
1,203.7 |
|
|
52.0 |
|
Exchange rate effect on cash,
cash equivalents and restricted cash |
|
(4.5 |
) |
|
13.6 |
|
Increase in cash, cash
equivalents and restricted cash |
|
1,140.6 |
|
|
245.1 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
635.0 |
|
|
513.5 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
1,775.6 |
|
|
$ |
758.6 |
|
|
|
|
|
|
Schedule
ISales
Mix(unaudited)
|
|
13 Weeks Ended July 31, 2021 |
|
13 Weeks Ended August 1, 2020 |
|
|
|
|
|
|
|
|
|
Net Sales (in millions): |
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
Hardware and accessories (1) |
|
$ |
609.6 |
|
|
51.5 |
% |
|
$ |
441.6 |
|
|
46.9 |
% |
Software (2) |
|
396.6 |
|
|
33.5 |
|
|
386.5 |
|
|
41.0 |
|
Collectibles |
|
177.2 |
|
|
15.0 |
|
|
113.9 |
|
|
12.1 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,183.4 |
|
|
100.0 |
% |
|
$ |
942.0 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended July 31, 2021 |
|
26 Weeks Ended August 1, 2020 |
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales (in millions): |
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
Hardware and accessories
(1) |
|
$ |
1,313.1 |
|
|
53.4 |
% |
|
$ |
954.7 |
|
|
48.6 |
% |
Software (2) |
|
794.5 |
|
|
32.3 |
|
|
803.5 |
|
|
41.0 |
|
Collectibles |
|
352.6 |
|
|
14.3 |
|
|
204.8 |
|
|
10.4 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,460.2 |
|
|
100.0 |
% |
|
$ |
1,963.0 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
(1) Includes sales
of new and pre-owned hardware, accessories, hardware bundles in
which hardware and digital or physical software are sold together
in a single SKU, interactive game figures, strategy guides, mobile
and consumer electronics. |
(2) Includes sales
of new and pre-owned video game software, digital software and PC
entertainment software. |
GameStop
Corp.Schedule II(in millions,
except per share data)(unaudited)
Non-GAAP results
The following tables
reconcile the Company's selling, general and administrative
expenses ("SG&A"), operating loss, net loss and loss per share
as presented in its unaudited consolidated statements of operations
and prepared in accordance with Generally Accepted Accounting
Principles ("GAAP") to its adjusted SG&A, adjusted operating
loss, adjusted net loss, adjusted EBITDA and adjusted loss per
share. The diluted weighted-average shares outstanding used to
calculated adjusted earnings per share may differ from GAAP
weighted-average shares outstanding. Under GAAP, basic and diluted
weighted-average shares outstanding are the same in periods where
there is a net loss. The reconciliations below are from continuing
operations only.
|
|
13 Weeks Ended |
|
|
13 Weeks Ended |
|
26 Weeks Ended |
|
26 Weeks Ended |
|
|
July 31, 2021 |
|
|
August 1, 2020 |
|
July 31, 2021 |
|
August 1, 2020 |
Adjusted SG&A |
|
|
|
|
|
|
|
|
|
|
|
|
SG&A |
|
$ |
378.9 |
|
|
$ |
348.2 |
|
|
$ |
749.2 |
|
|
$ |
734.7 |
|
Transformation costs |
|
|
(0.1 |
) |
|
0.2 |
|
|
(6.5 |
) |
|
(1.3 |
) |
Significant transactions(1) |
|
|
(0.2 |
) |
|
(7.5 |
) |
|
(0.4 |
) |
|
(7.5 |
) |
Divestitures, severance and other(2) |
|
|
(6.3 |
) |
|
(4.0 |
) |
|
(18.3 |
) |
|
(7.8 |
) |
Adjusted SG&A |
|
$ |
372.3 |
|
|
$ |
336.9 |
|
|
$ |
724.0 |
|
|
$ |
718.1 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes transaction costs associated with our Q1 and Q2 ATM
paid in the 13 and 26 weeks ended July 31,2021. Prior year includes
transaction costs associated with our debt exchange. |
(2) Severance includes cash and stock based compensation for key
personnel that have separated from the Company. |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Loss |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
$ |
(58.0 |
) |
|
$ |
(85.6 |
) |
|
$ |
(98.8 |
) |
|
$ |
(193.6 |
) |
Transformation costs |
|
|
0.1 |
|
|
(0.2 |
) |
|
6.5 |
|
|
1.3 |
|
Asset impairments |
|
|
— |
|
|
0.9 |
|
|
0.6 |
|
|
4.8 |
|
Significant transactions(1) |
|
|
0.2 |
|
|
(3.8 |
) |
|
0.4 |
|
|
(3.8 |
) |
Divestitures, severance and other(2) |
|
|
6.3 |
|
|
4.0 |
|
|
18.3 |
|
|
7.8 |
|
Adjusted operating loss |
|
$ |
(51.4 |
) |
|
$ |
(84.7 |
) |
|
$ |
(73.0 |
) |
|
$ |
(183.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
(1) Includes transaction costs associated with our Q1 and Q2 ATM
paid in the 13 and 26 weeks ended July 31,2021. Prior year includes
the gain on sale of assets relating to sale-leaseback transaction
and transaction costs associated with our debt exchange. |
(2) Severance includes cash and stock based compensation for key
personnel that have separated from the Company. |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Loss |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(61.6 |
) |
|
$ |
(111.3 |
) |
|
$ |
(128.4 |
) |
|
$ |
(277.0 |
) |
Loss from discontinued operations, net of tax |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
0.9 |
|
Net loss from continuing operations |
|
$ |
(61.6 |
) |
|
$ |
(111.0 |
) |
|
$ |
(128.4 |
) |
|
$ |
(276.1 |
) |
Transformation costs |
|
|
0.1 |
|
|
(0.2 |
) |
|
6.5 |
|
|
1.3 |
|
Asset impairments |
|
|
— |
|
|
0.9 |
|
|
0.6 |
|
|
4.8 |
|
Significant transactions(1) |
|
|
0.2 |
|
|
(4.6 |
) |
|
18.6 |
|
|
(5.3 |
) |
Divestitures, severance and other(2) |
|
|
6.3 |
|
|
4.0 |
|
|
18.3 |
|
|
7.8 |
|
Tax effect of non-GAAP adjustments |
|
|
— |
|
|
18.9 |
|
|
— |
|
|
17.9 |
|
Adjusted net loss |
|
$ |
(55.0 |
) |
|
$ |
(92.0 |
) |
|
$ |
(84.4 |
) |
|
$ |
(249.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted loss per share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.76 |
) |
|
$ |
(1.42 |
) |
|
$ |
(1.22 |
) |
|
$ |
(3.86 |
) |
Diluted |
|
$ |
(0.76 |
) |
|
$ |
(1.42 |
) |
|
$ |
(1.22 |
) |
|
$ |
(3.86 |
) |
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in adjusted calculation |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
72.6 |
|
|
65.0 |
|
|
69.3 |
|
|
64.7 |
|
Diluted |
|
|
72.6 |
|
|
65.0 |
|
|
69.3 |
|
|
64.7 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes transaction costs associated with our Q2 ATM paid in
the 13 weeks ended July 31, 2021, as well as our Q1 ATM and first
quarter make-whole premium and accelerated amortization of the
deferred financing costs associated with the voluntary early
redemption of the 2023 Senior Notes paid in the 26 weeks ended July
31, 2021. Prior year includes the gain on sale of assets relating
to sale-leaseback transactions, discount of open market purchases
of the 2021 Senior Notes, and gain on the early retirement of debt
for the 13 weeks ended August 1, 2020, as well as the gain on
retirement of debt for the 26 weeks ended August 1, 2020. |
(2) Severance includes cash and stock based compensation for key
personnel that have separated from the Company. |
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
26 Weeks Ended |
|
26 Weeks Ended |
|
|
July 31, 2021 |
|
August 1, 2020 |
|
July 31, 2021 |
|
August 1, 2020 |
Reconciliation of Net
Loss to Adjusted EBITDA |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(61.6 |
) |
|
$ |
(111.3 |
) |
|
$ |
(128.4 |
) |
|
$ |
(277.0 |
) |
Loss from discontinued
operations, net of tax |
|
— |
|
|
0.3 |
|
|
— |
|
|
0.9 |
|
Loss from continuing
operations |
|
$ |
(61.6 |
) |
|
$ |
(111.0 |
) |
|
$ |
(128.4 |
) |
|
$ |
(276.1 |
) |
Interest expense, net |
|
0.5 |
|
|
7.5 |
|
|
25.2 |
|
|
14.2 |
|
Depreciation and
amortization |
|
17.6 |
|
|
20.2 |
|
|
36.3 |
|
|
41.7 |
|
Income tax expense |
|
3.1 |
|
|
17.9 |
|
|
4.4 |
|
|
68.3 |
|
EBITDA |
|
$ |
(40.4 |
) |
|
$ |
(65.4 |
) |
|
$ |
(62.5 |
) |
|
$ |
(151.9 |
) |
Stock-based compensation |
|
4.3 |
|
|
2.1 |
|
|
6.5 |
|
|
3.9 |
|
Transformation costs |
|
0.1 |
|
|
(0.2 |
) |
|
6.5 |
|
|
1.3 |
|
Asset impairments |
|
— |
|
|
0.9 |
|
|
0.6 |
|
|
4.8 |
|
Significant
transactions(1) |
|
0.2 |
|
|
(3.8 |
) |
|
0.4 |
|
|
(3.8 |
) |
Divestitures, severance and
other(2) |
|
6.3 |
|
|
4.0 |
|
|
18.3 |
|
|
7.8 |
|
Adjusted EBITDA |
|
$ |
(29.5 |
) |
|
$ |
(62.4 |
) |
|
$ |
(30.2 |
) |
|
$ |
(137.9 |
) |
|
|
|
|
|
|
|
|
|
(1) Includes
transaction costs associated with our Q1 and Q2 ATM paid in the 13
and 26 weeks ended July 31,2021. Prior year includes the gain on
sale of assets relating to sale-leaseback transaction and
transaction costs associated with our debt exchange. |
(2) Severance
includes cash and stock based compensation for key personnel that
have separated from the Company. |
GameStop
Corp.Schedule III(in
millions)(unaudited)
Non-GAAP
results
The following table
reconciles the Company's cash flows provided by operating
activities as presented in its unaudited Consolidated Statements of
Cash Flows and prepared in accordance with GAAP to its free cash
flow. Free cash flow is considered a non-GAAP financial measure.
Management believes, however, that free cash flow, which measures
our ability to generate additional cash from our business
operations, is an important financial measure for use by investors
in evaluating the company’s financial performance.
|
13 Weeks Ended |
|
13 Weeks Ended |
|
26 Weeks Ended |
|
26 Weeks Ended |
|
July 31, 2021 |
|
August 1, 2020 |
|
July 31, 2021 |
|
August 1, 2020 |
Net cash flows (used in) provided by operating activities |
$ |
(11.5 |
) |
|
$ |
192.8 |
|
|
$ |
(30.3 |
) |
|
$ |
143.5 |
|
Purchase of property and
equipment |
(13.5 |
) |
|
(10.9 |
) |
|
(28.2 |
) |
|
(17.5 |
) |
Free cash flow |
$ |
(25.0 |
) |
|
$ |
181.9 |
|
|
$ |
(58.5 |
) |
|
$ |
126.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures and Other
Metrics
Adjusted EBITDA is a
supplemental financial measure of the Company’s performance that is
not required by, or presented in accordance with, GAAP. We believe
that the presentation of this non-GAAP financial measure provides
useful information to investors in assessing our financial
condition and results of operations. We define Adjusted EBITDA as
net income (loss) before income taxes, plus interest expense, net
and depreciation and amortization, excluding stock-based
compensation, transformation costs, business divestitures, asset
impairments, severance and other non-cash charges. Net income
(loss) is the GAAP financial measure most directly comparable to
Adjusted EBITDA. Our non-GAAP financial measures should not be
considered as an alternative to the most directly comparable GAAP
financial measure. Furthermore, non-GAAP financial measures have
limitations as an analytical tool because they exclude some but not
all items that affect the most directly comparable GAAP financial
measures. Some of these limitations include:
- certain items excluded from Adjusted EBITDA are significant
components in understanding and assessing a company’s financial
performance, such as a company’s cost of capital and tax
structure;
- Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements; and
- our computations of Adjusted EBITDA may not be comparable to
other similarly titled measures of other companies.
We compensate for the
limitations of Adjusted EBITDA as an analytical tool by reviewing
the comparable GAAP financial measure, understanding the
differences between the GAAP and non-GAAP financial measures and
incorporating these data points into our decision-making process.
Adjusted EBITDA is provided in addition to, and not as an
alternative to, the Company’s financial results prepared in
accordance with GAAP, and should not be considered in isolation or
as a substitute for analysis of our results as reported under GAAP.
Because Adjusted EBITDA may be defined and determined differently
by other companies in our industry, our definitions of these
non-GAAP financial measures may not be comparable to similarly
titled measures of other companies, thereby diminishing their
utility.
ContactGameStop Corp. Investor
Relations(817) 424-2001ir@gamestop.com
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