GameStop Reports 2017 Holiday Sales Results
January 12 2018 - 8:00AM
Global Same Store Sales Increase 11.8%; 13.7% in
the U.S. and 7.9% InternationallySales Growth Fueled by Strong
Performance in New Hardware, New Software, Accessories and
Collectibles
GameStop Corp.
(NYSE:GME)
, a global family of specialty retail
brands that makes the most popular technologies affordable and
simple, today reported sales results for the nine-week holiday
period ended December 30, 2017.
Total global sales for the holiday period were
$2.77 billion, a 10.6% increase compared to the 2016 holiday
period. Total comparable store sales increased 11.8%, growing 13.7%
in the U.S. and 7.9% internationally. Worldwide omnichannel sales
increased 21.5%.
Dan DeMatteo, interim chief executive officer,
stated, “We are pleased with our sales performance during the
important holiday period, driven by strength in the Nintendo Switch
and Xbox One X, and a solid increase in our collectibles business.
Our results demonstrate our customers’ enthusiastic response to new
products and our ability to execute on strategically targeted
promotions.”
Gaming Business Update
- New hardware sales increased 38.3%, driven by continued strong
demand for the Nintendo Switch and the launch of Microsoft’s Xbox
One X.
- Sales of new video game software increased 7.3%, largely
attributed to the success of Activision’s Call of Duty: WWII and
continued strength in Nintendo Switch titles.
- Pre-owned sales declined 8.1%, as customers shifted their spend
to compelling new video game and collectibles products.
- Video game accessories sales grew 33.7%, primarily related to
demand for Nintendo Switch accessories.
Non-Physical Gaming Business Update
- Collectibles sales increased 19.4% to $211.3 million, driven by
strong performance across apparel and toys.
- Digital sales and non-GAAP digital receipts increased 36.7% and
6.7%, respectively, excluding the 2016 holiday period revenues from
Kongregate which was divested in July 2017. On a reported basis,
digital sales increased 4.6%, while non-GAAP digital receipts
increased 2.2%.
- Technology Brands sales, which are not included in comparable
store sales, decreased 18.6%, driven by limited availability of the
iPhone X and changes made by AT&T to the compensation structure
in 2017.
Guidance UpdateGiven the
product category mix of sales in the holiday period, GameStop
expects to deliver adjusted earnings per share near the middle of
its previously announced full-year 2017 guidance of $3.10 to $3.40.
The company also expects full-year fiscal 2017 comparable store
sales to increase between four and six percent compared to the
comparable fifty-three-week period. The Company continues to
anticipate fiscal 2017 adjusted operating earnings for its
Technology Brands business to be in the range of $75 million to $90
million. This guidance excludes any year-end impairments and store
closing charges, as well as any tax effects related to the recently
enacted tax reform legislation.
In conjunction with the Company’s annual
impairment testing of goodwill and other intangible assets, which
is performed in the fourth quarter and is not yet finalized, the
Company expects to record non-cash impairment charges in the range
of $350 million to $400 million, primarily related to its
Technology Brands business. The impairment charges are primarily
due to the negative impact of a longer upgrade cycle for new mobile
devices and the changes made by AT&T to the compensation
structure in 2017. The charges do not affect the Company’s cash
flows or liquidity position.
The Company anticipates reporting fourth quarter
and full fiscal year 2017 results in late March, and will provide
fiscal 2018 guidance at that time.
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 7,400
stores across 14 countries. The company's consumer product network
also includes www.gamestop.com; 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 1,500
Simply Mac, Spring Mobile AT&T and Cricket stores. 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. 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.
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. Adjusted operating earnings and adjusted net income
exclude the effect of items such as asset impairments, store
closure costs, severance, as well as acquisition and divestiture
costs. 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 HarborThis 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,
future operations, margins, profitability, capital expenditures,
liquidity and capital resources and other financial and operating
information. Such statements include without limitation those about
the Company’s outlook for fiscal 2017, future financial and
operating results, projections, expectations and other statements
that are not historical facts. Forward-looking statements are
subject to significant risks and uncertainties and actual results
may differ materially from those reflected or described in the
forward-looking statements. The following factors, among others,
could cause actual results to differ from those reflected or
described in the forward-looking statements: our inability to
obtain sufficient quantities of product to meet consumer demand;
the timing of release and consumer demand for new and pre-owned
products; our ability to continue to expand, and successfully open
and operate new stores for our collectibles and technology 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 impact
of goodwill and intangible asset impairments; cost reduction
initiatives, including store closing costs; risks related to
changes in, and our continued retention of, executive officers and
other key personnel; changes in consumer preferences and economic
conditions; increased operating costs, including wages; cyber
security events and related costs; risks associated with
international operations; changes to our wireless industry
partnerships and operations; increased competition and changing
technology in the video game industry; 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; our effective tax rate and the factors affecting our
effective tax rate, including changes in international, federal or
state tax, trade and other laws and regulations; the costs and
outcomes of legal proceedings and tax audits. Additional factors
that could cause our 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 28, 2017 filed 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 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.
ContactMike LoftusVice President, Global
Controller and Investor RelationsGameStop
Corp.investorrelations@gamestop.com
Schedule I |
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GameStop Corp. |
|
Sales Mix |
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|
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9 Weeks Ended |
|
9 Weeks Ended |
|
|
Dec. 30, 2017 |
|
Dec. 31, 2016 |
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|
|
Percent |
|
|
|
Percent |
|
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
Net Sales (in
millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game
hardware |
$ |
717.7 |
|
|
25.9 |
% |
|
$ |
519.1 |
|
|
20.7 |
% |
|
New video game
software |
855.2 |
|
|
30.9 |
% |
|
797.1 |
|
|
31.9 |
% |
|
Pre-owned and value
video game products |
472.6 |
|
|
17.1 |
% |
|
514.3 |
|
|
20.6 |
% |
|
Video game
accessories |
251.2 |
|
|
9.1 |
% |
|
187.8 |
|
|
7.5 |
% |
|
Digital |
44.4 |
|
|
1.6 |
% |
|
42.5 |
|
|
1.7 |
% |
|
Technology Brands |
156.6 |
|
|
5.7 |
% |
|
192.4 |
|
|
7.7 |
% |
|
Collectibles |
211.3 |
|
|
7.6 |
% |
|
176.9 |
|
|
7.1 |
% |
|
Other |
59.1 |
|
|
2.1 |
% |
|
71.9 |
|
|
2.8 |
% |
|
Total |
$ |
2,768.1 |
|
|
100.0 |
% |
|
$ |
2,502.0 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
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