GameStop Reports 2018 Holiday Sales Results
January 18 2019 - 8:00AM
GameStop Corp. (NYSE: GME) today reported sales
results for the nine-week holiday period ended January 5, 2019.
Total global sales for the holiday period were
$2.63 billion, a 5.0% decrease compared to the 2017 nine-week
holiday period ended December 30, 2017. Total comparable store
sales increased 1.5%, including a 3.6% increase in the U.S.
partially offset by a 3.1% decrease internationally. Comparable
store sales are calculated comparing the nine weeks ended January
5, 2019 to the nine weeks ended January 6, 2018 in order to ensure
the appropriate weeks around the holiday are compared. The primary
contributor to the difference between the increase in comparable
store sales and the decrease in total company sales is the shift in
the company’s fiscal calendar for the 53rd week in fiscal 2017 and
the timing of the Call of Duty launch.
Rob Lloyd, chief operating officer and chief
financial officer, said, “As we anticipated coming into the holiday
season, we were able to leverage our position as a leader in the
video game industry to drive positive comps on top of what was a
strong holiday period in 2017. Our comp performance was driven by
strong sales in accessories, collectibles and digital which more
than offset the decline in pre-owned sales and new video game
hardware sales.”
Category Performance
- New hardware sales decreased 6.1%,
as a result of the successful Xbox One X launch in the 2017 holiday
period, partially offset by strong growth in Nintendo Switch
sales.
- Sales of new video game software
decreased 8.3%, driven primarily by the difference in launch timing
of Activision’s Call of Duty: Black Ops 4 which released in October
2018, compared to Call of Duty: WWII which released in November
2017.
- Pre-owned sales declined 16.4%
reflecting declines in software and hardware.
- Video game accessories sales grew
28.7% on the continued strength of controller and headset
sales.
- Collectibles sales increased 3.7%
to $219.2 million. The sales growth was constrained by
significantly lower promotional activity in fiscal 2018 in an
effort to better manage gross margin rate.
- Digital receipts increased 16.8% to
$352.9 million driven primarily by strength in sales of digital
currency.
- Technology Brands sales, which are
not included in comparable store sales, decreased 19.3%, driven by
a decrease in store count and store traffic.
Guidance UpdateGameStop is
reiterating its previously announced annual guidance for fiscal
year 2018 adjusted earnings per share of $2.55 to $2.75. This
includes the results of the Spring Mobile business, which will be
classified as discontinued operations for fiscal 2018. Comparable
store sales are expected to be approximately flat for the fiscal
year.
The Company anticipates reporting fourth quarter and full fiscal
year 2018 results in late March and will provide fiscal 2019
guidance at that time. The company anticipates that its Spring
Mobile business will generate approximately $75 million - $85
million of adjusted operating earnings in fiscal 2018. The sale of
that business was completed on January 16, 2019.
About GameStopGameStop Corp., a
Fortune 500 company headquartered in Grapevine, Texas, is a global,
multichannel video game and consumer electronics retailer. GameStop
operates over 5,800 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, and Simply Mac, which
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 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 operating earnings, adjusted net income 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, non-operating tax charges, as well as
acquisition and 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 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. Additionally, GameStop uses “digital receipts”
as an operating metric and defines it as the retail value paid by
the customer for digital content sold individually or bundled with
non-digital products and sales of subscriptions to our Game
Informer magazine in digital form. The vast majority of our digital
receipts come from digital products that are sold individually
rather than bundled with other products. Under GAAP, we recognize
the sale of these digital products on a net basis, whereby the
commissions earned are recorded to revenue rather than the full
retail price paid by the customer. We believe this operating metric
is useful in understanding the size and performance of our digital
business in comparison to measures of the overall digital industry
revenues and our other video game product categories.
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 2018, future financial and
operating results, projections, expectations and other statements
that are not historical facts. All statements regarding the board’s
review of operating, strategic, financial and structural
alternatives and expected costs and benefits, including whether
operating, strategic, financial and structural alternatives could
unlock value, are forward-looking statements. 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 from those reflected or described in the
forward-looking statements: the uncertain outcome, impact, effects
and results of the board’s review of operating, strategic,
financial and structural alternatives; volatility in capital and
credit markets, including changes that reduce availability, and
increase costs, of capital and credit; 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 business; 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; 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; and unexpected changes in the assumptions underlying our
outlook for fiscal 2018. 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 3, 2018
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.
Schedule I |
|
GameStop Corp. |
|
Sales Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 Weeks Ended |
|
9 Weeks Ended |
|
|
January 5, 2019 |
|
December 30, 2017 |
|
|
|
|
Percent |
|
|
|
Percent |
|
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
Net Sales (in
millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game
hardware |
$ |
673.7 |
|
|
25.6 |
% |
|
$ |
717.7 |
|
|
25.9 |
% |
|
New video game
software |
784.5 |
|
|
29.8 |
% |
|
855.2 |
|
|
30.9 |
% |
|
Pre-owned and value
video game products |
395.1 |
|
|
15.0 |
% |
|
472.6 |
|
|
17.1 |
% |
|
Video game
accessories |
323.3 |
|
|
12.3 |
% |
|
251.2 |
|
|
9.1 |
% |
|
Digital |
51.1 |
|
|
1.9 |
% |
|
44.4 |
|
|
1.6 |
% |
|
Technology Brands
(1) |
126.3 |
|
|
4.8 |
% |
|
156.6 |
|
|
5.7 |
% |
|
Collectibles |
219.2 |
|
|
8.3 |
% |
|
211.3 |
|
|
7.6 |
% |
|
Other |
55.5 |
|
|
2.3 |
% |
|
59.1 |
|
|
2.1 |
% |
|
Total |
$ |
2,628.7 |
|
|
100.0 |
% |
|
$ |
2,768.1 |
|
|
100.0 |
% |
|
(1) |
Our
Technology Brands product category is comprised of sales from
Spring Mobile, Simply Mac and our Cricket Wireless branded stores
("Cricket Wireless"). Cricket Wireless was sold in January 2018 and
Spring Mobile was sold on January 16, 2019. In our future press
releases and filings with the Securities Exchange and Commission,
the sales from Simply Mac and Cricket Wireless will be reported in
the "Other" product category and the sales of Spring Mobile will be
reported as discontinued operations. |
ContactGameStop Corp. Investor
Relations(817) 424-2001investorrelations@gamestop.com
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