GameStop Corp. (NYSE: GME) today announced
business updates related to the COVID-19 pandemic.
George Sherman, GameStop’s Chief Executive
Officer, said, “As we continue to navigate these unprecedented
times, our priority has been and continues to be on the well-being
of our employees, customers and business partners. I am very proud
of the resilience that our teams are showing during this
time. In very short order, we implemented a temporary
curbside pick-up process at the majority of our U.S. stores in
accordance with state and local ordinances. By using our
omni-channel buy online pickup in store and ship from store
capabilities, we are able to operate in a safe and regulatory
compliant way while meeting the increased demand for our products
as more consumers work, learn, and play from home.
Importantly, since we closed stores to the public on March 22nd,
through omni-channel fulfillment, we have retained over 90%1 of our
planned sales volumes in the two-thirds of our stores that are
conducting curbside operations. We believe this speaks to the
strength of our enhanced omni-channel capabilities implemented in
the fall of last year.”
Mr. Sherman continued, “We continue to
proactively manage our business with a goal to increase
financial flexibility and preserve cash flow in the current
environment. Today, we announced salary reductions for our senior
management team and board of directors, as well as wage rate
reductions for some other corporate and field support staff.
In addition, we have offered certain corporate and other support
team members the option to work under either half-time/half-pay
structure or a temporary furlough program. We believe our
aggressive focus on expense, inventory and capital expenditure
reductions will help preserve our financial health as we work to
ensure readiness and ramp up operations as soon as conditions
allow.”
Mr. Sherman concluded, “The situation remains
very fluid and a great deal of uncertainty remains, however, we
entered into this time with a strong balance sheet and believe that
we have sufficient cash and liquidity for the foreseeable future
and will continue to take all of the necessary steps to ensure
GameStop remains a strong and vibrant company at the end of this
crisis.”
The Company is taking the following actions in response to the
COVID-19 pandemic:
- A temporary base salary reduction of 50% for George Sherman,
Chief Executive Officer, 30% for Jim Bell, Chief Financial Officer
and the remainder of the executive leadership team.
- The Board of Directors has temporarily reduced cash
compensation to directors by 50%.
- Other actions include:
- Beginning April 26th, certain other employees across the
Company’s worldwide operating units will receive temporarily
reduced pay of between 10% and 30%.
- Offered certain of the Company’s corporate support staff the
option to either a temporary furlough or reduced workweek / reduced
pay program.
- Reduced inventory receipts to match demand with a focus on key
hardware, software and accessories products.
- Lowered capital spending to focus on mandatory maintenance or
near-term high value strategic projects.
- Due to the impact of governmental regulations and certain
landlord decisions to close properties, the Company did not make a
portion of certain lease payments and remains in discussions with
its landlords regarding ongoing rent payments, including potential
abatement, deferral and or restructuring of future rents during
this period of COVID-19 related closure.
Store OperationsThe Company
announced today the following updates to its global store
operations:
- Approximately one-third of U.S. stores locations remain closed,
with two-thirds of stores closed to customers but available for
curbside pick-up.
- The Company has begun the process of re-opening stores in
Italy, Germany, Austria and the states of South Carolina and
Georgia and is preparing for the potential to re-open in other
operating countries and states in the coming weeks.
- All stores in Australia remain open for business with strong
results continuing with approximately 24% comparable store sales
for the nine weeks ended April 4, 2020.
Sales Update 1The Company’s
comparable store sales for the nine-week period ended April 4,
2020, declined approximately 23% on a year-over-year basis, which
includes the impact of the majority of stores closed in most
operating countries throughout the fiscal month of March.
- In the fiscal March period ended March 21, 2020, the date when
the Company closed its stores to customer access, comparable U.S.
store sales grew approximately 3% as the Company experienced a
surge in demand across products that people need to work, learn or
play from home.
- For the five-week fiscal March period, Australia posted
comparable store sales increase of approximately 64%.
LiquidityAs of April 4, 2020,
the Company had approximately $772 million in total cash and
liquidity ($706 million in cash and $66 million in availability on
its revolver). The Company continues to expect it has sufficient
liquidity and financial flexibility to navigate the current
environment.
About GameStopGameStop Corp., a
Fortune 500 company headquartered in Grapevine, Texas, is the
world’s largest video game retailer, operates approximately 5,500
stores across 14 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.
Notes: (1) All references to
sales within this release are calculated based on the company’s
internal data, which the company uses to estimate revenue
performance on a daily or weekly interval. Sales growth percentages
represent the amount of absolute sales recovered relative the
company’s planned sales volumes during this period. Due to
the adoption of the temporary operating model and closure of some
stores, changes are based on absolute sales dollar changes and are
not presented in accordance with the company’s comparable sales
definition. The sales percentages in this release are estimated,
unaudited and subject to the closing of the fiscal quarter ending
May 2, 2020 and to quarter-end financial and accounting procedures
that have yet to be performed. When the company prepares its
financial statements for the fiscal quarter ending May 2, 2020, it
may identify material adjustments that would have changed the
amounts shown for the periods described in this release.
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 expectations for fiscal 2020, future financial and
operating results, projections, expectations and other statements
that are not historical facts. All statements regarding targeted
and expected benefits of our transformation, capital allocation,
profit improvement and cost-savings initiatives, and expected
fiscal 2020 results, 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 materially from those
reflected or described in the forward-looking statements: the
uncertain impact, effects and results of pursuit of operating,
strategic, financial and structural initiatives, including the
Reboot strategic plan; volatility in capital and credit markets,
including changes that reduce availability, and increase costs, of
capital and credit; the impact of the COVID-19 outbreak on capital
markets and our business; our inability to obtain sufficient
quantities of product to meet consumer demand, including due to
supply chain disruptions on account of trade restrictions,
political instability, COVID-19, labor disturbances and product
recalls; 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; our ability
to establish and profitably maintain the appropriate mix of digital
and physical presence in the markets we serve; our ability to
assess and implement technologies in support of our omnichannel
capabilities; 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,
executives and other key personnel and our ability to attract and
retain qualified employees in all areas of the organization;
changes in consumer preferences and economic conditions; increased
operating costs, including wages; disruptions to our information
technology systems including but not limited to security breaches
of systems protecting consumer and employee information or other
types of cybercrimes or cybersecurity attacks; 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; our use of proceeds
from the sale of our Spring Mobile business; and unexpected changes
in the assumptions underlying our outlook for fiscal 2020.
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 2, 2019 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.
ContactGameStop Corp. Investor Relations(817)
424-2001investorrelations@gamestop.com
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