GameStop Corp. (NYSE: GME), today reported sales
and earnings for the first quarter ended May 2, 2020.
George Sherman, GameStop’s chief executive
officer said, “During this unprecedented time, our priority is
focused on ensuring the safety and well-being of our employees,
customers and business partners as we continue the process of
opening our stores as restrictions are lifted, in our ongoing
effort to meet our customers’ needs. We are proud of our
team’s ability to quickly adapt to meet the increased demand for
our product offerings. As the pandemic spread, we leaned in
on our upgraded omni-channel capabilities to fulfill customer
orders through curbside pick-up where available, we reduced
discretionary spending and enhanced our liquidity while continuing
to advance our strategic priorities. While we delivered a
loss for the quarter in total, our performance included total sales
just shy of our original expectations, even as stores closed due to
the COVID-19 pandemic and key video game titles shifted to the
second and third quarters, exacerbating the headwind from operating
in the final stage of a console cycle. Even more impressive
is that our e-commerce sales grew 519% in the first quarter and
over 1,000% during the six weeks that our store base temporarily
closed to customer access. We believe this reflects the
loyalty of the GameStop customer and the confidence they place in
us as their preferred place to shop.”
Mr. Sherman, continued, “Importantly, we
continued to make progress on our strategic initiatives. We
continued to optimize the core business operation and maintained
financial strength and flexibility, recording a 43% decline in
inventory and a 54% decrease in accounts payable compared to last
year. Additionally, we saw significant progress towards
building a frictionless digital ecosystem as evidenced by our
successful omni-channel activities, including improved fulfillment
capabilities as we utilized our stores as distribution centers and
for curbside pick-up, which in most cases supported same day
delivery to the customer.”
Mr. Sherman, concluded, “As we begin the second
quarter, we are cautiously and prudently navigating the near-term,
as we are operating in the last few months of the current
generation console cycle and believe we have experienced a pull
forward in demand for end-of-life inventory given a surge in gaming
product demand following the global stay-at-home orders. That
said, we believe the performance we achieved despite multiple
headwinds is further evidence of the power of GameStop and the
advantages that we possess driven by our global footprint,
knowledgeable sales associates and strong loyalty base. We
believe these attributes along with our intense focus on expense
and working capital management have us poised to capitalize on the
hardware and software sales growth expected as several new software
titles and next generation consoles are introduced later this
year.”
First Quarter Results:As
previously announced, on March 22, 2020, the Company temporarily
closed all 3,526 of its U.S. locations – with approximately 65% of
these locations conducting a limited curbside pickup
offering. During the final six-weeks of the fiscal first
quarter, approximately 90% of the global store fleet was closed to
customer access and only Australia, which represents approximately
10% of the global store count, remained fully open and accessible
to customers, approximately 42% remained open for limited curbside
delivery and 48% remained fully closed. In Australia, where
all stores remained open for business during the first quarter,
increased demand drove a 35% comparable store sales increase.
(See reconciliation table of GAAP results to adjusted results in
Schedule II of this press release.)
- Total global comparable store sales
decreased 17% excluding stores that were closed during the first
quarter as a result of the COVID-19 pandemic. After including
the impact of stores that were closed for the majority of the
quarter due to the COVID-19 pandemic, comparable stores sales
decreased by approximately 30%.
- Global E-commerce sales increased
519% compared to the prior year first quarter, despite having
severely limited distribution operations across international
businesses.
- Gross margin declined 270 bps from
the prior year first quarter, driven by the increased mix of
hardware compared to the prior year first quarter.
- SG&A was $386.5 million, down
$67.2 million or 15% compared to $453.7 million in the prior year
first quarter which includes $18.5 million in incremental wages
paid to hourly associates to help offset lost wages due to store
closures from the COVID-19 pandemic, and approximately $3.0 million
in incremental costs associated with safety materials and equipment
to ensure the safety of customers and associates.
- Adjusted SG&A was $381.2
million, a reduction of $72.5 million, or 16% from the prior year
first quarter.
- Operating loss of ($108.0) million
compared to operating earnings of $17.5 million in the prior year
first quarter.
- Adjusted operating loss of ($98.8)
million compared to adjusted operating income of $17.5 million in
the prior year first quarter.
- Net loss of ($165.7) million, or
($2.57) per diluted share, including a $53.0 million non-cash tax
charge associated with the valuation allowance against deferred tax
assets, an additional $18.5 million in incremental wages paid to
our hourly associates to help offset lost wages due to store
closures from the COVID-19 pandemic, and approximately $3.0 million
in incremental costs associated with safety materials and equipment
to ensure the safety of our customers and associates, compared to
net income of $6.8 million, or earnings per share of $0.07 per
diluted share in the prior year first quarter.
- Adjusted EBITDA of ($75.5) million
compared to $42.7 million in the prior year first quarter.
- Adjusted net loss of ($103.9)
million or ($1.61) per diluted share, compared to adjusted net
income of $7.5 million, or $0.07 per diluted share in the prior
year first quarter.
Capital Allocation and Liquidity
UpdateAs of May 2, 2020, the Company had approximately
$570 million in total cash, reflecting $135 million drawn under its
revolving credit facility. As of June 3, 2020, the Company
had reduced its outstanding borrowings under the facility to
approximately $100 million. The Company continues to expect
it will have sufficient liquidity and financial flexibility to fund
its operations and navigate the current environment. Given
effective working capital management, the Company expects to have
total cash and liquidity between $575 million and $625 million as
of the end of its second fiscal quarter.
As of May 2, 2020, the Company had $417.2
million of debt on the balance sheet and on June 4, 2020, the
Company announced an exchange offer and consent solicitation for
the remaining unsecured notes due to mature in March 2021.
The new notes, if issued, will provide additional financial
flexibility by replacing and extending the maturity of the existing
notes validly tendered in the exchange offer until 2023.
There can be no assurance that the exchange offer and consent
solicitation will be consummated on the contemplated terms, or at
all.
Store Operations UpdateThe
Company continues to phase the reopening of its stores across all
operating countries where restrictions related to the global
pandemic have been lifted, and according to the mandates provided
by country, state and local officials, including the implementation
of strict sanitary processes and social distancing measures. As a
result, at the end of May 2020, the Company had approximately 85%
of its U.S. locations open to limited customer access or curbside
delivery, and approximately 90% of its international locations
open.
Subsequently, given the recent social unrest
experienced in various cities across the United States, the Company
temporarily closed approximately 100 stores that were previously
reopened, to protect the safety of associates and customers.
Approximately 35 of these locations will be closed for the
foreseeable future given extensive physical damage.
Progress on 2020 Strategic
Initiatives: The Company continues to focus on advancing
its 2020 strategic initiatives, in addition to adhering to its
previously announced actions in response to COVID-19 including:
- 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.
- Temporarily reduced cash
compensation for Board of Directors by 50%.
- Other actions include:
- Beginning April 26th, certain other employees across the
Company’s worldwide operating units received temporarily reduced
pay of between 10% and 30%.
- Offered certain of the Company’s corporate support staff the
option of 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.
The Company continues to focus on driving the
objectives of its four strategic priorities, however, it has made
particularly strong progress on two of these four initiatives
including efforts to optimize the core business and build a
frictionless digital ecosystem in the first quarter.
Optimize the core business by improving efficiency and
effectiveness across the organization.
- Further optimize inventory
efficiency and working capital leading to a 43% reduction in
inventory at quarter end and a 54% decline in accounts payable
while maintaining strong cash and liquidity; and
- Increased the flexibility within
its operations to maximize safe and effective omni-channel
fulfillment.
Build a frictionless digital ecosystem to reach GameStop
customers.
- Improved fulfillment capabilities
leading to the recapture of sales through stores open for limited
curbside pickup during the quarter, despite being temporarily
closed to customer traffic due to COVID-19; and
- Delivered a 519% increase in global E-commerce sales during the
quarter.
2020 Outlook (52-weeks ending January
30, 2021)The Company is closely monitoring the dynamic
situation around COVID-19 and potential impacts on its
business. Despite an initial surge in demand in its product
offerings when the global outbreak began, given the uncertainty
around the evolving situation, the Company has suspended guidance
at this time.
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 and intensifying
inventory discipline. Given these efforts and the expected
trajectory of the business, the Company anticipates it will
generate positive adjusted EBITDA for fiscal 2020.
The Company noted that fiscal May comparable
store sales declined approximately 4%, as heightened demand for its
product offerings was tempered by the expected decline in sales as
a result of the final stage of a hardware console cycle and the
shift of several key new software titles to later in the year.
Importantly, the strength of E-Commerce sales continued in May,
with global E-Commerce growth in fiscal May up over 1400%.
Conference Call InformationA
conference call with GameStop Corp.’s management is scheduled for
June 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 13703604. 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 approximately 5,300
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.
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, adjusted net
income, adjusted earnings per share, and Adjusted EBITDA. We
believe these non-GAAP financial measures provide useful
information to investors in evaluating our core operating
performance. Adjusted selling, general and administrative expenses
(“SG&A”), adjusted operating income, adjusted net income and
adjusted earnings 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 in addition to,
and not as an alternative for or considered in isolation to, the
Company's reported GAAP financial results. 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; 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 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 ended May 2, 2020 |
|
13 weeks ended May 4, 2019 |
Net sales |
|
$ |
1,021.0 |
|
|
$ |
1,547.7 |
|
Cost of sales |
|
738.6 |
|
|
1,076.5 |
|
Gross profit |
|
282.4 |
|
|
471.2 |
|
Selling, general and
administrative expenses |
|
386.5 |
|
|
453.7 |
|
Asset impairments |
|
3.9 |
|
|
— |
|
Operating (loss) earnings |
|
(108.0 |
) |
|
17.5 |
|
Interest expense, net |
|
6.7 |
|
|
7.7 |
|
(Loss) income from continuing operations before income taxes |
|
(114.7 |
) |
|
9.8 |
|
Income tax expense |
|
50.4 |
|
|
2.3 |
|
Net (loss) income from
continuing operations |
|
(165.1 |
) |
|
7.5 |
|
Loss from discontinued
operations, net of tax |
|
(0.6 |
) |
|
(0.7 |
) |
Net (loss) income |
|
$ |
(165.7 |
) |
|
$ |
6.8 |
|
|
|
|
|
|
Basic (loss) earnings per
share: |
|
|
|
|
Continuing operations |
|
$ |
(2.56 |
) |
|
$ |
0.07 |
|
Discontinued operations |
|
(0.01 |
) |
|
(0.01 |
) |
Basic (loss) earnings per share |
|
$ |
(2.57 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
Diluted (loss) earnings per
share: |
|
|
|
|
Continuing operations |
|
$ |
(2.56 |
) |
|
$ |
0.07 |
|
Discontinued operations |
|
(0.01 |
) |
|
(0.01 |
) |
Diluted (loss) earnings per share |
|
$ |
(2.57 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
Dividends per common
share |
|
$ |
— |
|
|
$ |
0.38 |
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
|
64.5 |
|
|
102.4 |
|
Diluted |
|
64.5 |
|
|
102.5 |
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
72.3 |
|
|
69.6 |
|
Gross profit |
|
27.7 |
|
|
30.4 |
|
Selling, general and
administrative expenses |
|
37.9 |
|
|
29.3 |
|
Asset impairments |
|
0.4 |
|
|
— |
|
Operating (loss) earnings |
|
(10.6 |
) |
|
1.1 |
|
Interest expense, net |
|
0.6 |
|
|
0.5 |
|
(Loss) income from continuing operations before income taxes |
|
(11.2 |
) |
|
0.6 |
|
Income tax expense |
|
5.0 |
|
|
0.1 |
|
Net (loss) income from
continuing operations |
|
(16.2 |
) |
|
0.5 |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
(0.1 |
) |
Net (loss) income |
|
(16.2 |
)% |
|
0.4 |
% |
|
GameStop Corp.Condensed Consolidated
Balance Sheets(in
millions)(unaudited) |
|
|
|
May 2, 2020 |
|
May 4, 2019 |
ASSETS: |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
570.3 |
|
|
$ |
543.2 |
|
Receivables, net |
|
86.7 |
|
|
126.0 |
|
Merchandise inventories, net |
|
654.7 |
|
|
1,149.1 |
|
Prepaid expenses and other current assets |
|
99.1 |
|
|
101.8 |
|
Assets held for sale |
|
9.1 |
|
|
— |
|
Total current assets |
|
1,419.9 |
|
|
1,920.1 |
|
Property and equipment,
net |
|
256.3 |
|
|
313.3 |
|
Operating lease right-of-use
assets |
|
706.2 |
|
|
807.0 |
|
Deferred income taxes |
|
29.2 |
|
|
147.3 |
|
Goodwill |
|
— |
|
|
363.9 |
|
Other noncurrent assets |
|
57.4 |
|
|
81.7 |
|
Total assets |
|
$ |
2,469.0 |
|
|
$ |
3,633.3 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
212.1 |
|
|
$ |
458.4 |
|
Accrued liabilities and other current liabilities |
|
506.0 |
|
|
588.9 |
|
Current portion of operating lease liabilities |
|
249.4 |
|
|
250.0 |
|
Current portion of long-term debt, net |
|
417.2 |
|
|
— |
|
Borrowings under revolving line of credit |
|
135.0 |
|
|
— |
|
Total current liabilities |
|
1,519.7 |
|
|
1,297.3 |
|
Long-term debt, net |
|
— |
|
|
468.9 |
|
Operating lease
liabilities |
|
493.9 |
|
|
552.6 |
|
Other long-term
liabilities |
|
20.4 |
|
|
22.8 |
|
Total liabilities |
|
2,034.0 |
|
|
2,341.6 |
|
Total stockholders’ equity |
|
435.0 |
|
|
1,291.7 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,469.0 |
|
|
$ |
3,633.3 |
|
|
Schedule ISales
Mix(unaudited) |
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
May 2, 2020 |
|
May 4, 2019 |
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales (in millions): |
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
Hardware and accessories (1) |
|
$ |
513.1 |
|
|
50.3 |
% |
|
$ |
656.5 |
|
|
42.4 |
% |
Software (2) |
|
417.0 |
|
|
40.8 |
|
|
733.1 |
|
|
47.4 |
|
Collectibles |
|
90.9 |
|
|
8.9 |
|
|
158.1 |
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,021.0 |
|
|
100.0 |
% |
|
$ |
1,547.7 |
|
|
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 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 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 |
|
|
May 2, 2020 |
|
May 4, 2019 |
Adjusted
SG&A |
SG&A |
|
$ |
386.5 |
|
|
$ |
453.7 |
|
Transformation costs |
|
(1.5 |
) |
|
— |
|
Business divestitures |
|
(1.4 |
) |
|
— |
|
Severance and other |
|
(2.4 |
) |
|
— |
|
Adjusted SG&A |
|
$ |
381.2 |
|
|
$ |
453.7 |
|
|
|
|
|
|
Adjusted Operating
Earnings |
|
|
|
|
Operating (loss) earnings |
|
$ |
(108.0 |
) |
|
$ |
17.5 |
|
Transformation costs |
|
1.5 |
|
|
— |
|
Business divestitures |
|
1.4 |
|
|
— |
|
Property, equipment & other asset impairments |
|
3.9 |
|
|
— |
|
Severance and other |
|
2.4 |
|
|
— |
|
Adjusted operating (loss)
earnings |
|
$ |
(98.8 |
) |
|
$ |
17.5 |
|
|
|
|
|
|
Adjusted Net (Loss)
Income |
|
|
|
|
Net (loss) income |
|
$ |
(165.7 |
) |
|
$ |
6.8 |
|
Loss from discontinued operations |
|
0.6 |
|
|
0.7 |
|
Net (loss) income from
continuing operations |
|
$ |
(165.1 |
) |
|
$ |
7.5 |
|
Transformation costs |
|
1.5 |
|
|
— |
|
Business divestitures |
|
1.4 |
|
|
— |
|
Property, equipment & other asset impairments |
|
3.9 |
|
|
— |
|
Severance and other |
|
2.4 |
|
|
— |
|
Tax effect of non-GAAP adjustments |
|
(1.0 |
) |
|
— |
|
Tax valuation allowance |
|
53.0 |
|
|
— |
|
Adjusted net (loss)
income |
|
$ |
(103.9 |
) |
|
$ |
7.5 |
|
|
|
|
|
|
Adjusted (loss) earnings per
share |
|
|
|
|
Basic |
|
$ |
(1.61 |
) |
|
$ |
0.07 |
|
Diluted |
|
$ |
(1.61 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
Number of shares used in
adjusted calculation |
|
|
|
|
Basic |
|
64.5 |
|
|
102.4 |
|
Diluted |
|
64.5 |
|
|
102.5 |
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
May 2, 2020 |
|
May 4, 2019 |
Reconciliation of
Adjusted EBITDA to Net (Loss) Income |
|
|
|
|
Net (loss) income |
|
$ |
(165.7 |
) |
|
$ |
6.8 |
|
Loss from discontinued
operations, net of tax |
|
0.6 |
|
|
0.7 |
|
(Loss) income from continuing
operations |
|
$ |
(165.1 |
) |
|
$ |
7.5 |
|
Interest expense, net |
|
6.7 |
|
|
7.7 |
|
Depreciation and amortization |
|
21.5 |
|
|
23.3 |
|
Income tax expense |
|
50.4 |
|
|
2.3 |
|
EBITDA |
|
$ |
(86.5 |
) |
|
$ |
40.8 |
|
Stock-based compensation |
|
1.8 |
|
|
1.9 |
|
Transformation costs |
|
1.5 |
|
|
— |
|
Business divestitures |
|
1.4 |
|
|
— |
|
Property, equipment & other asset impairments |
|
3.9 |
|
|
— |
|
Severance and other |
|
2.4 |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(75.5 |
) |
|
$ |
42.7 |
|
|
|
|
|
|
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
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