GameStop Corp. (NYSE: GME), today reported results
for the second quarter ended August 1, 2020 that reflected strong
positive cash flow, a strengthened balance sheet and progress
toward its strategic objectives despite the negative impact from
temporary store closures related to COVID-19 and operating in the
last few months of the current generation console cycle.
George Sherman, GameStop’s chief executive
officer, said, “The second quarter saw strong progress toward our
strategic initiatives, fueling an 800% increase in global
E-commerce sales, a $133.7 million reduction in SG&A and a
significant improvement in our balance sheet with $735.1 million in
cash at quarter-end and a 50% reduction in inventory, as compared
to the second quarter last year. These achievements combined
drove $181.9 million in free cash flow for the quarter. I am
extremely proud of our team, and their dedication to our mission,
our strategy and safely serving our customers despite operating in
an unprecedented environment.”
“We believe the actions we are taking to
optimize the core operations of our business by increasing
efficiencies and creating a frictionless digital ecosystem to serve
our customers, wherever and whenever they choose to shop, are
enabling us to navigate the COVID-19 environment while positioning
us well for the launch of the next generation of
consoles.”
Mr. Sherman continued, “While the ongoing
pandemic continues to create a somewhat uncertain environment in
the short term, we are very pleased by the consumer response at
GameStop to the few recent video game product introductions and we
believe we are ready, with expanded service and payment options, to
handle the expected surge in demand and participate in a very
significant way in the console launches later this year.”
Second Quarter Sales Results:
- Net sales were $942.0 million, down
26.7% from the fiscal 2019 second quarter reflecting:
- The impact of operating during the last few months of the
seven-year-long current generation console cycle and the subsequent
limited availability of hardware and accessories;
- A 13% reduction in total store operating days due to temporary
store closures driven by the global COVID-19 pandemic; and
- A 10% reduction in the store base, as part of the Company’s
de-densification strategy, partially offset by almost 40% of
closed store sales recaptured through the transfer to neighboring
locations and online, leading to improved cash flow.
- Comparable store sales declined
12.7%, adjusting for fewer store operating days due to store
closures as a result of the global COVID-19 pandemic.
- Global E-commerce sales rose 800%
and are included in comparable store sales.
Progress Toward Strategy:Optimized the
core business by improving efficiency and effectiveness across the
organization:
- Delivered a $133.7 million
reduction in SG&A in the second quarter and a $200.9 million
reduction in the first six months of fiscal 2020 from the
comparable periods of fiscal 2019 through continued expense
reduction initiatives;
- Transformed physical store presence
through the ongoing de-densification of the GameStop store base,
thereby reducing costs while transferring approximately 40% of
closed store sales to neighboring locations and online;
- Improved on strong liquidity
position, generating $192.8 million in Cash Flow From Operations
and $181.9 million in Free Cash Flow, as defined by cash generated
from operations less purchase of property and equipment;
- Strengthened the balance sheet
with:
- $735.1 million of cash at quarter end and reduced borrowings
under its asset based revolving credit facility by $100 million to
$35 million; and
- A 50% reduction in inventory and 30.4% reduction in accounts
payable as compared to the second quarter of fiscal 2019.
- Completed exchange offer and
consent solicitation for $216.4 million of unsecured notes,
reducing the amount due to mature in March 2021 to approximately
$198 million. The newly issued notes provide additional
financial flexibility by replacing and extending the maturity of
the existing notes to 2023;
- Completed sale leaseback
transactions for three office buildings, adding $43.2 million in
liquidity. Subsequent to the end of the second fiscal
quarter, the Company executed two additional sale leaseback
transactions related to office buildings, adding another
approximately $43.7 million in liquidity; and
- Finalized the wind down of
operations in Denmark, Finland, Norway and Sweden.
Built a frictionless digital ecosystem to reach GameStop
customers:
- Delivered an 800% increase in
global E-commerce sales during the quarter to represent over 20% of
total net sales;
- Improved fulfillment capabilities
leading to the recapture of approximately 73% of sales through
stores open for limited curbside pickup during the quarter, despite
being closed to customer traffic due to COVID-19 for 13% of the
store operating days in the period; and
- Improved fulfillment capabilities
drove a 90% fulfillment rate within 24 hours of customers placing
an order.
Additional Second Quarter
Highlights:(See reconciliation table of GAAP results to
non-GAAP adjusted results in Schedule II of this press
release.)
- Gross margin declined 420 bps from
the prior year second quarter, driven by the increased mix of
hardware sales, which carry a lower gross margin.
- SG&A was $348.2 million, down
$133.7 million or 27.7% compared to $481.9 million in the prior
year second quarter, and includes approximately $2.7 million in
incremental costs associated with safety materials and equipment to
ensure the safety of customers and associates.
- Adjusted SG&A was $336.9
million, a reduction of $108.0 million, or 24.3% from the prior
year second quarter.
- Operating loss of ($85.6) million
compared to operating loss of ($446.7) million in the prior year
second quarter.
- Adjusted operating loss of ($84.7)
million compared to adjusted operating loss of ($45.8) million in
the prior year second quarter.
- Net loss of ($111.3) million, or
($1.71) per diluted share, including approximately $2.7 million in
incremental costs associated with safety materials and equipment to
ensure the safety of our customers and associates, compared to net
loss of ($415.3) million, or loss per share of ($4.15) per diluted
share in the prior year second quarter.
- Adjusted EBITDA of ($62.4) million
compared to ($19.9) million in the prior year second quarter.
- Adjusted net loss from continuing
operations of ($91.2) million or ($1.40) per diluted share,
compared to adjusted net loss from continuing operations of ($32.0)
million, or ($0.32) per diluted share in the prior year second
quarter.
Capital Allocation and Liquidity
UpdateAs of August 1, 2020, the Company had $735.1 million
in total cash and reduced its outstanding borrowings under the
asset based revolving credit facility to $35 million.
As of August 1, 2020, the Company had $256.3
million of short-term debt and $215.9 million of long-term debt on
the balance sheet. As previously announced on July 2, 2020, the
Company completed the exchange offer and consent solicitation for
$216.4 million of unsecured notes, reducing the amount due to
mature in March 2021 to approximately $198 million. The newly
issued notes provide additional financial flexibility by replacing
and extending the maturity of the existing notes to 2023.
Store Operations UpdateDuring
the second quarter, the Company continued the phased reopening of
its stores across all operating countries where restrictions
related to the global pandemic were lifted, and according to the
mandates provided by federal, state and local officials, including
the implementation of strict sanitization processes and social
distancing measures. As a result, at the end of August 2020, the
Company had substantially all of its worldwide locations open to
limited customer access or curbside delivery.
2020 Outlook (52 weeks ending January
30, 2021)The Company continues to focus on efforts that
position it to manage through this unprecedented time, such as
maintaining its balance sheet strength, prioritizing the allocation
of resources to areas of the business that produce strong cash
flow, reducing expenses across the business, developing and
expanding its digital strategy, and intensifying inventory
discipline. Due to the uncertainty around the duration and evolving
impact of COVID-19, the Company is continuing to suspend
guidance.
Conference Call InformationA
conference call with GameStop Corp.’s management is scheduled for
September 9, 2020 at 5:00 p.m. ET to discuss the Company’s
financial results. The phone number for the call is 877-451-6152
and the confirmation code is 13708462. 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., a
Fortune 500 company headquartered in Grapevine, Texas, is the
world’s largest video game retailer, operates over 5,000 stores
across 10 countries, and offers the best selection of new and
pre-owned video gaming consoles, accessories and video game titles,
in both physical and digital formats. GameStop also offers
fans a wide variety of POP! vinyl figures, collectibles, board
games and more. Through GameStop’s unique buy-sell-trade program,
gamers can trade in video game consoles, games, and accessories, as
well as consumer electronics for cash or in-store credit. The
company's consumer product network also includes www.gamestop.com
and Game Informer® magazine, the world's leading print and digital
video game publication.
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 Measures and Other
MetricsAs 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 SG&A, adjusted operating income (loss), adjusted
net income (loss), adjusted earnings (loss) per share, adjusted
EBITDA and free cash flow. We believe these non-GAAP
financial measures provide useful information to investors in
evaluating our core operating performance. Adjusted selling,
general and administrative expenses (“Adjusted SG&A”), adjusted
operating income (loss), adjusted net income (loss) and adjusted
earnings (loss) per share exclude the effect of items such as
transformation costs, asset impairments, store closure costs,
severance, non-operating tax charges, as well as divestiture costs.
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
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 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, including expectations as to future
operating profit improvement. Such statements include without
limitation those about the Company’s financial results,
expectations and other statements that are not historical facts.
Forward-looking statements are subject to significant risks and
uncertainties and actual developments, business decisions and
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 materially from those
reflected or described in the forward-looking statements:
macroeconomic pressures, including the effects of COVID-19 on
consumer spending and our 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 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; the
impact of international crises and trade restrictions and tariffs
on the delivery of the Company’s products; the Company’s ability to
obtain favorable terms from its suppliers; the international nature
of the Company’s business; 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
competitive nature of the Company’s industry; the Company’s ability
to attract and retain executive officers and key personnel; 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 react to trends in
pop culture with regard to its sales of collectibles and our
dependence on licensed products for a substantial portion of such
sales; the Company’s ability to maintain security of its customer,
employee or company information; potential harm to the Company’s
reputation; the Company’s ability to maintain effective control
over financial reporting; the Company’s vendors’ ability to provide
marketing and merchandise support at historical levels;
restrictions on the Company’s ability to purchase and sell
pre-owned video games; potential decrease in popularity of certain
types of video games; changes in the Company’s global tax rate;
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 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 February 1, 2020 the subsection entitled “Risks Related
to Our Business” of Item 1A of which has been amended and restated
in GameStop’s Current Report on Form 8-K filed on June 5, 2020 and
our 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 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.
|
GameStop Corp.Condensed Consolidated
Statements of Operations(in millions, except per
share data)(unaudited) |
|
|
|
13 weeks endedAugust 1, 2020 |
|
13 weeks endedAugust 3, 2019 |
Net sales |
|
$ |
942.0 |
|
|
$ |
1,285.7 |
|
Cost of sales |
|
689.8 |
|
|
886.6 |
|
Gross profit |
|
252.2 |
|
|
399.1 |
|
Selling, general and
administrative expenses |
|
348.2 |
|
|
481.9 |
|
Goodwill and asset
impairments |
|
0.9 |
|
|
363.9 |
|
Gain on sale of assets |
|
(11.3 |
) |
|
— |
|
Operating loss |
|
(85.6 |
) |
|
(446.7 |
) |
Interest expense, net |
|
7.5 |
|
|
7.0 |
|
Loss from continuing operations before income taxes |
|
(93.1 |
) |
|
(453.7 |
) |
Income tax expense
(benefit) |
|
17.9 |
|
|
(40.1 |
) |
Net loss from continuing
operations |
|
(111.0 |
) |
|
(413.6 |
) |
Loss from discontinued
operations, net of tax |
|
(0.3 |
) |
|
(1.7 |
) |
Net loss |
|
$ |
(111.3 |
) |
|
$ |
(415.3 |
) |
|
|
|
|
|
Basic loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(1.71 |
) |
|
$ |
(4.14 |
) |
Discontinued operations |
|
(0.01 |
) |
|
(0.02 |
) |
Basic loss per share |
|
$ |
(1.71 |
) |
|
$ |
(4.15 |
) |
|
|
|
|
|
Diluted loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(1.71 |
) |
|
$ |
(4.14 |
) |
Discontinued operations |
|
(0.01 |
) |
|
(0.02 |
) |
Diluted loss per share |
|
$ |
(1.71 |
) |
|
$ |
(4.15 |
) |
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
|
65.0 |
|
|
100.0 |
|
Diluted |
|
65.0 |
|
|
100.0 |
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
73.2 |
|
|
69.0 |
|
Gross profit |
|
26.8 |
|
|
31.0 |
|
Selling, general and
administrative expenses |
|
37.0 |
|
|
37.4 |
|
Goodwill and asset
impairments |
|
0.1 |
|
|
28.3 |
|
Gain on sale of assets |
|
(1.2 |
) |
|
— |
|
Operating loss |
|
(9.1 |
) |
|
(34.7 |
) |
Interest expense, net |
|
0.8 |
|
|
0.6 |
|
Loss from continuing operations before income taxes |
|
(9.9 |
) |
|
(35.3 |
) |
Income tax expense
(benefit) |
|
1.9 |
|
|
(3.1 |
) |
Net loss from continuing
operations |
|
(11.8 |
) |
|
(32.2 |
) |
Loss from discontinued
operations, net of tax |
|
— |
|
|
(0.1 |
) |
Net loss |
|
(11.8 |
)% |
|
(32.3 |
)% |
|
|
26 weeks endedAugust 1, 2020 |
|
26 weeks endedAugust 3, 2019 |
Net sales |
|
$ |
1,963.0 |
|
|
$ |
2,833.4 |
|
Cost of sales |
|
1,428.4 |
|
|
1,963.1 |
|
Gross profit |
|
534.6 |
|
|
870.3 |
|
Selling, general and
administrative expenses |
|
734.7 |
|
|
935.6 |
|
Goodwill and asset
impairments |
|
4.8 |
|
|
363.9 |
|
Gain on sale of assets |
|
(11.3 |
) |
|
— |
|
Operating loss |
|
(193.6 |
) |
|
(429.2 |
) |
Interest expense, net |
|
14.2 |
|
|
14.7 |
|
Loss from continuing operations before income taxes |
|
(207.8 |
) |
|
(443.9 |
) |
Income tax expense
(benefit) |
|
68.3 |
|
|
(37.8 |
) |
Net loss from continuing
operations |
|
(276.1 |
) |
|
(406.1 |
) |
Loss from discontinued
operations, net of tax |
|
(0.9 |
) |
|
(2.4 |
) |
Net loss |
|
$ |
(277.0 |
) |
|
$ |
(408.5 |
) |
|
|
|
|
|
Basic loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(4.26 |
) |
|
$ |
(4.01 |
) |
Discontinued operations |
|
(0.01 |
) |
|
(0.02 |
) |
Basic loss per share |
|
$ |
(4.28 |
) |
|
$ |
(4.04 |
) |
|
|
|
|
|
Diluted loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(4.26 |
) |
|
$ |
(4.01 |
) |
Discontinued operations |
|
(0.01 |
) |
|
(0.02 |
) |
Diluted loss per share |
|
$ |
(4.28 |
) |
|
$ |
(4.04 |
) |
|
|
|
|
|
Dividends per common
share |
|
$ |
— |
|
|
$ |
0.38 |
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
|
64.7 |
|
|
101.2 |
|
Diluted |
|
64.7 |
|
|
101.2 |
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
72.8 |
|
|
69.3 |
|
Gross profit |
|
27.2 |
|
|
30.7 |
|
Selling, general and
administrative expenses |
|
37.5 |
|
|
33.0 |
|
Goodwill and asset
impairments |
|
0.2 |
|
|
12.8 |
|
Gain on sale of assets |
|
(0.6 |
) |
|
— |
|
Operating loss |
|
(9.9 |
) |
|
(15.1 |
) |
Interest expense, net |
|
0.7 |
|
|
0.6 |
|
Loss from continuing operations before income taxes |
|
(10.6 |
) |
|
(15.7 |
) |
Income tax expense
(benefit) |
|
3.5 |
|
|
(1.4 |
) |
Net loss from continuing
operations |
|
(14.1 |
) |
|
(14.3 |
) |
Loss from discontinued
operations, net of tax |
|
— |
|
|
(0.1 |
) |
Net loss |
|
(14.1 |
)% |
|
(14.4 |
)% |
|
|
|
|
|
|
GameStop Corp.Condensed Consolidated
Balance Sheets(in
millions)(unaudited) |
|
|
|
August 1, 2020 |
|
August 3, 2019 |
ASSETS: |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
735.1 |
|
|
$ |
424.0 |
|
Receivables, net |
|
83.1 |
|
|
122.4 |
|
Merchandise inventories, net |
|
474.6 |
|
|
948.9 |
|
Prepaid expenses and other current assets |
|
87.1 |
|
|
143.2 |
|
Assets held-for-sale |
|
— |
|
|
29.1 |
|
Total current assets |
|
1,379.9 |
|
|
1,667.6 |
|
Property and equipment,
net |
|
219.7 |
|
|
312.0 |
|
Operating lease right-of-use
assets |
|
689.0 |
|
|
769.7 |
|
Deferred income taxes |
|
29.2 |
|
|
157.8 |
|
Other noncurrent assets |
|
57.4 |
|
|
80.8 |
|
Total assets |
|
$ |
2,375.2 |
|
|
$ |
2,987.9 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
256.4 |
|
|
$ |
368.3 |
|
Accrued liabilities and other current liabilities |
|
580.7 |
|
|
593.7 |
|
Current portion of operating lease liabilities |
|
218.8 |
|
|
240.3 |
|
Short-term debt, including current portion of long-term debt,
net |
|
221.3 |
|
|
— |
|
Borrowings under revolving line of credit |
|
35.0 |
|
|
— |
|
Liabilities held-for-sale |
|
— |
|
|
14.5 |
|
Total current liabilities |
|
1,312.2 |
|
|
1,216.8 |
|
Long-term debt, net |
|
215.9 |
|
|
419.1 |
|
Operating lease
liabilities |
|
475.5 |
|
|
523.9 |
|
Other long-term
liabilities |
|
19.3 |
|
|
18.4 |
|
Total liabilities |
|
2,022.9 |
|
|
2,178.2 |
|
Total stockholders’ equity |
|
352.3 |
|
|
809.7 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,375.2 |
|
|
$ |
2,987.9 |
|
|
|
|
|
|
|
GameStop Corp.Condensed Consolidated
Statements of Cash Flows(in
millions)(unaudited) |
|
|
|
13 weeks endedAugust 1, 2020 |
|
13 weeks endedAugust 3, 2019 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(111.3 |
) |
|
$ |
(415.3 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales) |
|
20.2 |
|
|
22.9 |
|
Goodwill and asset impairments |
|
0.9 |
|
|
363.9 |
|
Stock-based compensation expense |
|
2.1 |
|
|
3.3 |
|
Deferred income taxes |
|
— |
|
|
(11.8 |
) |
(Gain) loss on disposal of property and equipment, net |
|
(9.9 |
) |
|
0.2 |
|
Other |
|
(0.7 |
) |
|
2.5 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
6.1 |
|
|
1.6 |
|
Merchandise inventories |
|
198.2 |
|
|
181.1 |
|
Prepaid expenses and other current assets |
|
(4.1 |
) |
|
(11.2 |
) |
Prepaid income taxes and income taxes payable |
|
47.5 |
|
|
(75.5 |
) |
Accounts payable and accrued liabilities |
|
80.4 |
|
|
(52.4 |
) |
Operating lease right-of-use assets and liabilities |
|
(36.0 |
) |
|
8.8 |
|
Changes in other long-term liabilities |
|
(0.6 |
) |
|
0.2 |
|
Net cash flows provided by operating activities |
|
192.8 |
|
|
18.3 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and equipment |
|
(10.9 |
) |
|
(22.6 |
) |
Proceeds from sale of property and equipment |
|
51.8 |
|
|
— |
|
Other |
|
1.2 |
|
|
(0.9 |
) |
Net cash flows provided by (used in) investing activities |
|
42.1 |
|
|
(23.5 |
) |
Cash flows from financing
activities: |
|
|
|
|
Repurchase of common shares |
|
— |
|
|
(62.9 |
) |
Proceeds from French term loans |
|
23.6 |
|
|
— |
|
Dividends paid |
|
— |
|
|
(0.2 |
) |
Borrowings from the revolver |
|
— |
|
|
— |
|
Repayments of revolver borrowings |
|
(100.0 |
) |
|
— |
|
Repayments of senior notes |
|
(3.0 |
) |
|
(51.4 |
) |
Settlement of stock-based awards |
|
(0.5 |
) |
|
(0.2 |
) |
Net cash flows used in financing activities |
|
(79.9 |
) |
|
(114.7 |
) |
Exchange rate effect on cash and cash equivalents and restricted
cash |
|
19.7 |
|
|
1.3 |
|
Increase in cash held-for-sale |
|
— |
|
|
(0.1 |
) |
Increase (decrease) in cash and cash equivalents and restricted
cash |
|
174.7 |
|
|
(118.7 |
) |
Cash and cash equivalents and
restricted cash at beginning of period |
|
583.9 |
|
|
556.4 |
|
Cash and cash equivalents and
restricted cash at end of period |
|
$ |
758.6 |
|
|
$ |
437.7 |
|
|
|
|
|
|
|
GameStop Corp.Condensed Consolidated
Statements of Cash Flows(in
millions)(unaudited) |
|
|
|
26 weeks endedAugust 1, 2020 |
|
26 weeks endedAugust 3, 2019 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(277.0 |
) |
|
$ |
(408.5 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales) |
|
41.7 |
|
|
46.2 |
|
Goodwill and asset impairments |
|
4.8 |
|
|
363.9 |
|
Stock-based compensation expense |
|
3.9 |
|
|
5.2 |
|
Deferred income taxes |
|
45.4 |
|
|
(11.8 |
) |
(Gain) loss on disposal of property and equipment, net |
|
(9.6 |
) |
|
0.9 |
|
Other |
|
(0.2 |
) |
|
3.7 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
60.5 |
|
|
8.5 |
|
Merchandise inventories |
|
394.2 |
|
|
270.5 |
|
Prepaid expenses and other current assets |
|
1.7 |
|
|
(7.4 |
) |
Prepaid income taxes and income taxes payable |
|
69.8 |
|
|
(76.5 |
) |
Accounts payable and accrued liabilities |
|
(193.7 |
) |
|
(839.4 |
) |
Operating lease right-of-use assets and liabilities |
|
2.8 |
|
|
(2.2 |
) |
Changes in other long-term liabilities |
|
(0.8 |
) |
|
0.2 |
|
Net cash flows provided by (used in) operating activities |
|
143.5 |
|
|
(646.7 |
) |
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and equipment |
|
(17.5 |
) |
|
(41.2 |
) |
Proceeds from sale of property and equipment |
|
51.8 |
|
|
— |
|
Other |
|
1.7 |
|
|
(1.0 |
) |
Net cash flows provided by (used in) investing activities |
|
36.0 |
|
|
(42.2 |
) |
Cash flows from financing
activities: |
|
|
|
|
Repurchase of common shares |
|
— |
|
|
(62.9 |
) |
Proceeds from French term loans |
|
23.6 |
|
|
— |
|
Dividends paid |
|
(0.3 |
) |
|
(40.5 |
) |
Borrowings from the revolver |
|
150.0 |
|
|
— |
|
Repayments of revolver borrowings |
|
(115.0 |
) |
|
— |
|
Repayments of senior notes |
|
(5.3 |
) |
|
(404.5 |
) |
Settlement of stock-based awards |
|
(1.0 |
) |
|
(0.8 |
) |
Net cash flows provided by (used in) financing activities |
|
52.0 |
|
|
(508.7 |
) |
Exchange rate effect on cash and cash equivalents and restricted
cash |
|
13.6 |
|
|
(5.1 |
) |
Increase in cash held-for-sale |
|
— |
|
|
(0.1 |
) |
Increase (decrease) in cash and cash equivalents and restricted
cash |
|
245.1 |
|
|
(1,202.8 |
) |
Cash and cash equivalents and
restricted cash at beginning of period |
|
513.5 |
|
|
1,640.5 |
|
Cash and cash equivalents and
restricted cash at end of period |
|
$ |
758.6 |
|
|
$ |
437.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule ISales
Mix(unaudited) |
|
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
|
August 1, 2020 |
|
August 3, 2019 |
|
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales (in
millions): |
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
|
Hardware and
accessories (1) |
$ |
441.6 |
|
|
46.9 |
% |
|
$ |
554.9 |
|
|
43.2 |
% |
Software (2) |
386.5 |
|
|
41.0 |
|
|
558.3 |
|
|
43.4 |
|
Collectibles |
113.9 |
|
|
12.1 |
|
|
172.5 |
|
|
13.4 |
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
942.0 |
|
|
100.0 |
% |
|
$ |
1,285.7 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended |
|
26 Weeks Ended |
|
|
|
August 1, 2020 |
|
August 3, 2019 |
|
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales (in
millions): |
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
|
Hardware and
accessories (1) |
$ |
954.7 |
|
|
48.6 |
% |
|
$ |
1,211.4 |
|
|
42.7 |
% |
Software (2) |
803.5 |
|
|
41.0 |
|
|
1,291.4 |
|
|
45.6 |
|
Collectibles |
204.8 |
|
|
10.4 |
|
|
330.6 |
|
|
11.7 |
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
1,963.0 |
|
|
100.0 |
% |
|
$ |
2,833.4 |
|
|
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, and the operations of our Simply Mac stores,
which were sold in September 2019. |
|
|
|
(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 resultsThe following
tables reconcile the Company's selling, general and administrative
expenses ("SG&A"), operating (loss) earnings, net (loss) income
and earnings 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) earnings, adjusted net (loss) income,
adjusted EBITDA and adjusted earnings 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 |
|
|
August 1, 2020 |
|
August 3, 2019 |
|
August 1, 2020 |
|
August 3, 2019 |
Adjusted
SG&A |
|
|
|
|
SG&A |
|
$ |
348.2 |
|
|
$ |
481.9 |
|
|
$ |
734.7 |
|
|
$ |
935.6 |
|
Transformation costs |
|
0.2 |
|
|
(16.7 |
) |
|
(1.3 |
) |
|
(16.7 |
) |
Significant transactions(1) |
|
(7.5 |
) |
|
— |
|
|
(7.5 |
) |
|
— |
|
Divestitures, severance and other |
|
(4.0 |
) |
|
(20.3 |
) |
|
(7.8 |
) |
|
(20.3 |
) |
Adjusted SG&A |
|
$ |
336.9 |
|
|
$ |
444.9 |
|
|
$ |
718.1 |
|
|
$ |
898.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
$ |
(85.6 |
) |
|
$ |
(446.7 |
) |
|
$ |
(193.6 |
) |
|
$ |
(429.2 |
) |
Transformation costs |
|
|
(0.2 |
) |
|
|
16.7 |
|
|
|
1.3 |
|
|
|
16.7 |
|
Goodwill and asset impairments |
|
|
0.9 |
|
|
|
363.9 |
|
|
|
4.8 |
|
|
|
363.9 |
|
Significant transactions(2) |
|
|
(3.8 |
) |
|
|
— |
|
|
|
(3.8 |
) |
|
|
— |
|
Divestitures, severance and other |
|
|
4.0 |
|
|
|
20.3 |
|
|
|
7.8 |
|
|
|
20.3 |
|
Adjusted operating loss |
|
$ |
(84.7 |
) |
|
$ |
(45.8 |
) |
|
$ |
(183.5 |
) |
|
$ |
(28.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(111.3 |
) |
|
$ |
(415.3 |
) |
|
$ |
(277.0 |
) |
|
$ |
(408.5 |
) |
Loss from discontinued operations |
|
|
0.3 |
|
|
|
1.7 |
|
|
|
0.9 |
|
|
|
2.4 |
|
Net loss from continuing
operations |
|
$ |
(111.0 |
) |
|
$ |
(413.6 |
) |
|
$ |
(276.1 |
) |
|
$ |
(406.1 |
) |
Transformation costs |
|
|
(0.2 |
) |
|
|
16.7 |
|
|
|
1.3 |
|
|
|
16.7 |
|
Goodwill and asset impairments |
|
|
0.9 |
|
|
|
363.9 |
|
|
|
4.8 |
|
|
|
363.9 |
|
Significant transactions(2) |
|
|
(3.8 |
) |
|
|
— |
|
|
|
(3.8 |
) |
|
|
— |
|
Divestitures, severance and other |
|
|
4.0 |
|
|
|
20.3 |
|
|
|
7.8 |
|
|
|
20.3 |
|
Tax effect of non-GAAP adjustments |
|
|
18.9 |
|
|
|
(19.3 |
) |
|
|
17.9 |
|
|
|
(19.3 |
) |
Tax valuation allowance |
|
|
— |
|
|
|
— |
|
|
|
53.0 |
|
|
|
— |
|
Adjusted net loss |
|
$ |
(91.2 |
) |
|
$ |
(32.0 |
) |
|
$ |
(195.1 |
) |
|
$ |
(24.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.40 |
) |
|
$ |
(0.32 |
) |
|
$ |
(3.01 |
) |
|
$ |
(0.24 |
) |
Diluted |
|
$ |
(1.40 |
) |
|
$ |
(0.32 |
) |
|
$ |
(3.01 |
) |
|
$ |
(0.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in
adjusted calculation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
65.0 |
|
|
|
100.0 |
|
|
|
64.7 |
|
|
|
101.2 |
|
Diluted |
|
|
65.0 |
|
|
|
100.0 |
|
|
|
64.7 |
|
|
|
101.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes transaction costs associated with our debt exchange.
(2) Includes the gain on sale of assets relating to
sale-leaseback transactions and transaction costs associated with
our debt exchange. |
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
26 Weeks Ended |
|
26 Weeks Ended |
|
|
August 1, 2020 |
|
August 3, 2019 |
|
August 1, 2020 |
|
August 3, 2019 |
Reconciliation of
Adjusted EBITDA to Net Loss |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(111.3 |
) |
|
$ |
(415.3 |
) |
|
$ |
(277.0 |
) |
|
$ |
(408.5 |
) |
Loss from discontinued
operations, net of tax |
|
0.3 |
|
|
1.7 |
|
|
0.9 |
|
|
2.4 |
|
Loss from continuing
operations |
|
$ |
(111.0 |
) |
|
$ |
(413.6 |
) |
|
$ |
(276.1 |
) |
|
$ |
(406.1 |
) |
Interest expense, net |
|
7.5 |
|
|
7.0 |
|
|
14.2 |
|
|
14.7 |
|
Depreciation and amortization |
|
20.2 |
|
|
22.9 |
|
|
41.7 |
|
|
46.2 |
|
Income tax expense (benefit) |
|
17.9 |
|
|
(40.1 |
) |
|
68.3 |
|
|
(37.8 |
) |
EBITDA |
|
$ |
(65.4 |
) |
|
$ |
(423.8 |
) |
|
$ |
(151.9 |
) |
|
$ |
(383.0 |
) |
Stock-based compensation |
|
2.1 |
|
|
3.0 |
|
|
3.9 |
|
|
5.0 |
|
Transformation costs |
|
(0.2 |
) |
|
16.7 |
|
|
1.3 |
|
|
16.7 |
|
Goodwill and asset impairments |
|
0.9 |
|
|
363.9 |
|
|
4.8 |
|
|
363.9 |
|
Significant transactions(1) |
|
(3.8 |
) |
|
— |
|
|
(3.8 |
) |
|
— |
|
Divestitures, severance and other |
|
4.0 |
|
|
20.3 |
|
|
7.8 |
|
|
20.3 |
|
Adjusted EBITDA |
|
$ |
(62.4 |
) |
|
$ |
(19.9 |
) |
|
$ |
(137.9 |
) |
|
$ |
22.9 |
|
|
|
|
|
|
|
|
|
|
(1)
Includes the gain on sale of assets relating to sale-leaseback
transactions and transaction costs associated with our debt
exchange. |
|
|
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 and adjusted 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 |
|
August 1, 2020 |
|
August 3, 2019 |
|
August 1, 2020 |
|
August 3, 2019 |
Net cash flows provided by (used in) operating activities |
$ |
192.8 |
|
|
$ |
18.3 |
|
|
$ |
143.5 |
|
|
$ |
(646.7 |
) |
Purchase of property and equipment |
(10.9 |
) |
|
(22.6 |
) |
|
(17.5 |
) |
|
(41.2 |
) |
Free cash flow |
$ |
181.9 |
|
|
$ |
(4.3 |
) |
|
$ |
126.0 |
|
|
$ |
(687.9 |
) |
Adjustments: |
|
|
|
|
|
|
|
Rollover of accounts payable payments |
— |
|
|
— |
|
|
— |
|
|
415.4 |
|
Adjusted free cash flow |
$ |
181.9 |
|
|
$ |
(4.3 |
) |
|
$ |
126.0 |
|
|
$ |
(272.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures and Other
MetricsAdjusted 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) 424-2001investorrelations@gamestop.com
GameStop (NYSE:GME)
Historical Stock Chart
From Mar 2024 to Apr 2024
GameStop (NYSE:GME)
Historical Stock Chart
From Apr 2023 to Apr 2024