Concludes Review of Strategic and Financial
Alternatives
GameStop Corp. (NYSE: GME), today reported sales
and earnings for the fourth quarter and fiscal year ended February
2, 2019. As a reminder, the fourth quarter of fiscal 2018
contained 13 weeks of operating results compared to 14 weeks in
fiscal 2017, and fiscal 2018 contained 52 weeks of operating
results compared to 53 weeks in fiscal 2017. Same store sales
comparisons for the fiscal quarter and fiscal year are based on the
most closely comparable weeks for the 13 week and 52 week periods.
Dan DeMatteo, GameStop’s executive chairman
said, “This past year was a pivotal one for GameStop, capped by
retail industry veteran George Sherman’s appointment as chief
executive officer. In conjunction with the board’s
comprehensive review of strategic and financial alternatives, we
executed the sale of Spring Mobile at an attractive
valuation. As a result, we are better positioned to drive
shareholder value with an intense focus on leveraging our global
gaming and collectibles business. Additionally, we are
significantly reducing leverage through the announced retirement of
$350 million of outstanding notes, and we have increased
flexibility with respect to future capital allocation
opportunities. We are excited to move forward under George’s
leadership as we refine our strategic direction and implement
several initiatives under development to strengthen the company for
the future and drive sustainable growth and profitability.”
Rob Lloyd, chief operating officer and chief
financial officer, added, “We are pleased to have delivered fiscal
2018 results within our adjusted guidance range, which included
fourth quarter and full year sales growth across video game
accessories, collectibles and digital. Excluding the impact
of the 53rd week in fiscal 2017, new hardware sales for the year
were in line with last year. As we think about 2019 and
beyond, we recognize the challenges facing our pre-owned video game
business and are prepared to address them as we continue to evolve
our business model going forward. Importantly, we will
continue to leverage our powerful brand to drive growth and, with a
new cost savings and profit improvement initiative in place, we
will focus our efforts on driving profitability. GameStop is a
leader in the video game industry, and we remain committed to
capitalizing on our leadership position to discover new and unique
ways to meet our loyal customers’ entertainment needs and attract
new customers.”
Fourth Quarter ResultsAs
previously disclosed, the Company completed the sale of its Spring
Mobile business on January 16, 2019 and the results of that
business are included in discontinued operations for the fourth
quarter and fiscal 2018 period. Fiscal fourth quarter 2018
contained 13 weeks of operating results compared to 14 weeks in
fiscal 2017.
Total global sales from continuing operations
decreased 7.6% (decreased 6.2% in constant currency) to $3.1
billion, resulting in a consolidated comparable store sales
increase of 1.4% (3.4% increase in the U.S. and 2.9% decrease
internationally). The primary contributors to the difference
between the increase in comparable store sales and the decrease in
total company sales was the shift in the company’s fiscal calendar
for the 53rd week in fiscal 2017 and the timing of the Call of Duty
launch.
- New hardware sales decreased 9.8%, with an increase in Nintendo
Switch sales offset by a decline in Xbox One X sales due to its
strong launch in the prior year and the impact of the 53rd week in
fiscal 2017.
- New software sales decreased 7.8%, driven by key titles
launching earlier in the year compared to last year and the impact
of the 53rd week in fiscal 2017.
- Accessories sales increased 18.8% on the continued strength of
controller and headset sales.
- Pre-owned sales declined 21.3% reflecting declines in hardware
and software.
- Digital receipts increased 4.7% to $432.5 million, primarily
driven by strength in sales of digital currency.
- Collectibles sales increased 3.1% to $268.8 million, with
continued growth in both domestic and international stores.
GameStop’s fourth quarter GAAP net income (loss)
was ($187.7) million, or ($1.84) per diluted share, compared to net
income (loss) of ($105.9) million, or ($1.04) per diluted share, in
the prior-year quarter. Fourth quarter fiscal 2018 results
include asset impairment charges and other items of $334.5 million
($351.6 million net of taxes), or $3.44 per diluted share,
primarily related to impairment of goodwill. Fourth quarter
fiscal 2017 results included asset impairment charges and other
items of $406.5 million ($310.9 million net of taxes), or $3.06 per
diluted share, primarily related to impairment of intangible
assets.
Excluding the asset impairment charges and other
items, GameStop's adjusted net income from continuing operations
for the fourth quarter decreased 16.2% to $148.5 million, compared
to adjusted net income from continuing operations of $177.2 million
in the prior-year quarter. Adjusted earnings per diluted
share from continuing operations were $1.45 compared to adjusted
earnings per diluted share from continuing operations of $1.74 in
the prior-year quarter.
Fiscal 2018 ResultsFiscal 2018
contained 52 weeks of operating results compared to 53 weeks in
fiscal 2017.
Total global sales from continuing operations
decreased 3.1% to $8.3 billion, while consolidated comparable store
sales decreased 0.3% (1.8% increase in the U.S. and 4.8% decrease
internationally).
Key takeaways for fiscal 2018 include:
- Accessories sales increased 22.0%.
- Collectibles sales increased 11.2% to $707.5 million.
- Digital receipts increased 16.5% to $1.3 billion.
- New hardware sales declined 1.3%.
- New software sales declined 5.1%.
- Pre-owned sales declined 13.2%.
- Generated free cash flow of $232.7 million.
GameStop's fiscal 2018 GAAP net income (loss)
was ($673.0) million or ($6.59) per diluted share, compared to net
income of $34.7 million, or $0.34 per diluted share in fiscal
2017. Fiscal 2018 results include asset impairment charges
and other items of $964.2 million ($948.9 million net of taxes), or
$9.29 per diluted share, primarily related to impairment of
goodwill. Fiscal 2017 GAAP results include asset impairment
charges and other items of $399.7 million ($303.9 million net of
taxes), or $3.00 per diluted share, primarily related to impairment
of intangible assets.
Excluding asset impairment charges and other
items, GameStop's adjusted net income from continuing operations
for fiscal 2018 decreased 22.9% to $218.4 million, compared to
adjusted net income from continuing operations of $283.1 million in
fiscal 2017. Adjusted earnings per diluted share from continuing
operations were $2.14 compared to adjusted earnings per diluted
share from continuing operations of $2.79 in the prior fiscal
year. For fiscal 2018, adjusted earnings per diluted share,
including both continuing and discontinued operations, were $2.70,
within the company’s guidance range of $2.55 to $2.75, compared to
$3.34 for fiscal 2017.
A reconciliation of non-GAAP results, including
adjusted net income from continuing operations, adjusted net income
from discontinued operations and adjusted total net income, and
operating earnings from continuing operations, operating earnings
from discontinued operations and total operating earnings, to its
closest GAAP measure is included with this release (Schedule III
and IV).
Capital Allocation UpdateOn
March 4, 2019, GameStop’s board of directors declared a quarterly
cash dividend of $0.38 per common share for shareholders of record
at the close of business on March 15, 2019 which was paid on March
29, 2019.
The company anticipates the retirement of the
$350 million in unsecured senior notes scheduled to mature in
October 2019 to be completed by April 4, 2019. The company
currently has $300 million available under the current share
repurchase authorization.
2019 OutlookAs a result of the
strategic and financial alternatives review conducted in fiscal
2018, the company announced that it is embarking on a cost savings
and profit improvement initiative designed to strengthen the
organization for the future and support long-term improved
financial performance and profitability. These initiatives
include supply chain efficiencies, operational improvements,
expense savings and pricing and promotion optimization. Based
on initial estimates, which are preliminary and could change as the
program is implemented throughout the year, the company is working
to achieve annualized operating profit improvements of
approximately $100 million. Given the timing of the program,
the company expects minimal impact on fiscal 2019 results.
Given the planned cost savings and profit
improvement initiative and the announcement of a new CEO starting
on April 15, 2019, the company is not providing annual earnings per
share guidance at this time. However, the company expects
first quarter earnings of breakeven to a loss of $0.05 per share,
consistent with the seasonally slower first half of the fiscal
year, and is providing full year sales and tax guidance as
follows:
|
|
|
FY 2019 Total Sales (calculated using sales from continuing
operations) |
|
-5% to -10% |
|
|
|
FY 2019 Comparable Store Sales |
|
-5% to -10% |
|
|
|
FY 2019 Adjusted (Non-GAAP) Income Tax
Rate |
|
Approximately 27% |
|
|
|
Conference Call Information
A conference call with GameStop Corp.’s
management is scheduled for April 2, 2019 at 5:00 p.m. ET to
discuss the company’s financial results. The phone number for the
call is 800-263-0877 and the confirmation code is 5954479.
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 GameStop
GameStop 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 Metrics
As 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 Harbor
This 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
expectations for fiscal 2019, future financial and operating
results, projections, expectations and other statements that are
not historical facts. All statements regarding the Board’s review
of strategic and financial alternatives and expected costs and
benefits, including whether operating, strategic, financial and
structural alternatives and initiatives 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 impact, effects and
results of the board’s review of operating, strategic, financial
and structural alternatives and the planned redemption of the $350
million in unsecured notes; 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; our use of proceeds
from the sale of our Spring Mobile business; and unexpected changes
in the assumptions underlying our outlook for fiscal 2019.
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.
|
GameStop Corp.Condensed
Consolidated Statements of Operations(in millions,
except per share data)(unaudited) |
|
|
|
13 weeks endedFebruary 2,
2019 |
|
14 weeks endedFebruary 3,
2018 |
Net sales |
|
$ |
3,063.0 |
|
|
$ |
3,316.0 |
|
Cost of sales |
|
2,314.2 |
|
|
2,451.3 |
|
Gross
profit |
|
748.8 |
|
|
864.7 |
|
Selling, general and
administrative expenses |
|
527.4 |
|
|
568.1 |
|
Depreciation and
amortization |
|
25.1 |
|
|
31.7 |
|
Goodwill
impairments |
|
413.4 |
|
|
— |
|
Asset impairments |
|
15.0 |
|
|
13.8 |
|
Operating (loss)
earnings |
|
(232.1 |
) |
|
251.1 |
|
Interest expense,
net |
|
10.5 |
|
|
13.1 |
|
(Loss) earnings
from continuing operations before income taxes |
|
(242.6 |
) |
|
238.0 |
|
Income tax expense |
|
25.9 |
|
|
121.1 |
|
Net (loss) income from
continuing operations |
|
(268.5 |
) |
|
116.9 |
|
Income (loss) from
discontinued operations, net of tax |
|
80.8 |
|
|
(222.8 |
) |
Net loss |
|
$ |
(187.7 |
) |
|
$ |
(105.9 |
) |
|
|
|
|
|
Basic (loss) earnings
per share: |
|
|
|
|
Continuing operations |
|
$ |
(2.63 |
) |
|
$ |
1.15 |
|
Discontinued operations |
|
0.79 |
|
|
(2.20 |
) |
Basic loss per
share |
|
$ |
(1.84 |
) |
|
$ |
(1.04 |
) |
|
|
|
|
|
Diluted (loss) earnings
per share: |
|
|
|
|
Continuing operations |
|
$ |
(2.63 |
) |
|
$ |
1.15 |
|
Discontinued operations |
|
0.79 |
|
|
(2.19 |
) |
Diluted loss per
share |
|
$ |
(1.84 |
) |
|
$ |
(1.04 |
) |
|
|
|
|
|
Dividends per common
share |
|
$ |
0.38 |
|
|
$ |
0.38 |
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
Basic |
|
102.2 |
|
|
101.5 |
|
Diluted |
|
102.2 |
|
|
101.6 |
|
|
|
|
|
|
Percentage of Net
Sales: |
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
75.6 |
% |
|
73.9 |
% |
Gross
profit |
|
24.4 |
% |
|
26.1 |
% |
Selling, general and
administrative expenses |
|
17.2 |
% |
|
17.1 |
% |
Depreciation and
amortization |
|
0.8 |
% |
|
1.0 |
% |
Goodwill
impairments |
|
13.5 |
% |
|
— |
% |
Asset impairments |
|
0.5 |
% |
|
0.4 |
% |
Operating (loss)
earnings |
|
(7.6 |
)% |
|
7.6 |
% |
Interest expense,
net |
|
0.3 |
% |
|
0.4 |
% |
(Loss) earnings from
continuing operations before income tax expense |
|
(7.9 |
)% |
|
7.2 |
% |
Income tax expense |
|
0.9 |
% |
|
3.7 |
% |
Net (loss) income from
continuing operations |
|
(8.8 |
)% |
|
3.5 |
% |
Income (loss) from
discontinued operations, net of tax |
|
2.7 |
% |
|
(6.7 |
)% |
Net loss |
|
(6.1 |
)% |
|
(3.2 |
)% |
|
|
|
|
|
|
|
|
GameStop
Corp.Condensed Consolidated Statements of
Operations(in millions, except per share
data)(unaudited) |
|
|
|
52 weeks ended February 2, 2019 |
|
53 weeks ended February 3, 2018 |
Net sales |
|
$ |
8,285.3 |
|
|
$ |
8,547.1 |
|
Cost of sales |
|
5,977.2 |
|
|
6,062.2 |
|
Gross
profit |
|
2,308.1 |
|
|
2,484.9 |
|
Selling, general and
administrative expenses |
|
1,888.6 |
|
|
1,909.6 |
|
Depreciation and
amortization |
|
105.6 |
|
|
122.3 |
|
Goodwill
impairments |
|
970.7 |
|
|
— |
|
Asset impairments |
|
45.2 |
|
|
13.8 |
|
Operating (loss)
earnings |
|
(702.0 |
) |
|
439.2 |
|
Interest expense,
net |
|
51.1 |
|
|
55.3 |
|
(Loss) earnings
from continuing operations before income taxes |
|
(753.1 |
) |
|
383.9 |
|
Income tax expense |
|
41.7 |
|
|
153.5 |
|
Net (loss) income from
continuing operations |
|
(794.8 |
) |
|
230.4 |
|
Income (loss) from
discontinued operations, net of tax |
|
121.8 |
|
|
(195.7 |
) |
Net (loss) income |
|
$ |
(673.0 |
) |
|
$ |
34.7 |
|
|
|
|
|
|
Basic (loss) earnings
per share: |
|
|
|
|
Continuing operations |
|
$ |
(7.79 |
) |
|
$ |
2.27 |
|
Discontinued operations |
|
1.19 |
|
|
(1.93 |
) |
Basic (loss) earnings
per share |
|
$ |
(6.59 |
) |
|
$ |
0.34 |
|
|
|
|
|
|
Diluted (loss) earnings
per share: |
|
|
|
|
Continuing operations |
|
$ |
(7.79 |
) |
|
$ |
2.27 |
|
Discontinued operations |
|
1.19 |
|
|
(1.93 |
) |
Diluted (loss) earnings
per share |
|
$ |
(6.59 |
) |
|
$ |
0.34 |
|
|
|
|
|
|
Dividends per common
share |
|
$ |
1.52 |
|
|
$ |
1.52 |
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
Basic |
|
102.1 |
|
|
101.4 |
|
Diluted |
|
102.1 |
|
|
101.5 |
|
|
|
|
|
|
Percentage of Net
Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
72.1 |
% |
|
70.9 |
% |
Gross
profit |
|
27.9 |
% |
|
29.1 |
% |
Selling, general and
administrative expenses |
|
22.9 |
% |
|
22.4 |
% |
Depreciation and
amortization |
|
1.3 |
% |
|
1.4 |
% |
Goodwill
impairments |
|
11.7 |
% |
|
— |
% |
Asset impairments |
|
0.5 |
% |
|
0.2 |
% |
Operating (loss)
earnings |
|
(8.5 |
)% |
|
5.1 |
% |
Interest expense,
net |
|
0.6 |
% |
|
0.6 |
% |
(Loss) earnings
from continuing operations before income tax expense |
|
(9.1 |
)% |
|
4.5 |
% |
Income tax expense |
|
0.5 |
% |
|
1.8 |
% |
Net (loss) income from
continuing operations |
|
(9.6 |
)% |
|
2.7 |
% |
Income (loss) from
discontinued operations, net of tax |
|
1.5 |
% |
|
(2.3 |
)% |
Net (loss) income |
|
(8.1 |
)% |
|
0.4 |
% |
|
|
|
|
|
|
|
|
GameStop
Corp.Condensed Consolidated Balance
Sheets(in
millions)(unaudited) |
|
|
|
February 2, 2019 |
|
February 3, 2018 |
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
1,624.4 |
|
|
$ |
854.2 |
|
Receivables, net |
|
134.2 |
|
|
138.6 |
|
Merchandise inventories, net |
|
1,250.5 |
|
|
1,250.3 |
|
Prepaid
expenses and other current assets |
|
118.6 |
|
|
115.2 |
|
Assets
held for sale |
|
— |
|
|
660.1 |
|
Total
current assets |
|
3,127.7 |
|
|
3,018.4 |
|
Property and
equipment: |
|
|
|
|
Land |
|
18.7 |
|
|
19.9 |
|
Buildings
and leasehold improvements |
|
638.2 |
|
|
651.8 |
|
Fixtures
and equipment |
|
900.2 |
|
|
914.6 |
|
Total
property and equipment |
|
1,557.1 |
|
|
1,586.3 |
|
Less
accumulated depreciation |
|
1,235.8 |
|
|
1,235.3 |
|
Net
property and equipment |
|
321.3 |
|
|
351.0 |
|
Goodwill |
|
363.9 |
|
|
1,350.5 |
|
Other noncurrent
assets |
|
231.4 |
|
|
321.7 |
|
Total
assets |
|
$ |
4,044.3 |
|
|
$ |
5,041.6 |
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
1,051.9 |
|
|
$ |
892.3 |
|
Accrued
liabilities |
|
752.8 |
|
|
950.1 |
|
Income
taxes payable |
|
27.2 |
|
|
37.5 |
|
Current
portion of debt, net |
|
349.2 |
|
|
— |
|
Liabilities held for sale |
|
— |
|
|
50.9 |
|
Total
current liabilities |
|
2,181.1 |
|
|
1,930.8 |
|
Other long-term
liabilities |
|
55.4 |
|
|
78.4 |
|
Long-term debt,
net |
|
471.6 |
|
|
817.9 |
|
Total
liabilities |
|
2,708.1 |
|
|
2,827.1 |
|
Stockholders’
equity |
|
1,336.2 |
|
|
2,214.5 |
|
Total liabilities and
stockholders’ equity |
|
$ |
4,044.3 |
|
|
$ |
5,041.6 |
|
|
GameStop Corp.Condensed
Consolidated Statements of Cash Flows(in
millions)(unaudited) |
|
|
|
52 weeks ended February 2, 2019 |
|
53 weeks ended February 3, 2018 |
Cash flows from
operating activities: |
|
|
|
|
Net
(loss) income |
|
$ |
(673.0 |
) |
|
$ |
34.7 |
|
Adjustments to reconcile net (loss) income to net cash flows
provided by operating activities: |
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales) |
|
126.9 |
|
|
151.9 |
|
Provision
for inventory reserves |
|
57.3 |
|
|
59.1 |
|
Goodwill
and asset impairments |
|
1,015.9 |
|
|
395.1 |
|
Stock-based compensation expense |
|
10.7 |
|
|
25.6 |
|
Deferred
income taxes |
|
(4.1 |
) |
|
(107.9 |
) |
Loss on
disposal of property and equipment |
|
2.0 |
|
|
8.5 |
|
Gain on
divestiture |
|
(100.8 |
) |
|
(6.4 |
) |
Other |
|
(36.2 |
) |
|
(34.2 |
) |
Changes
in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
(34.4 |
) |
|
35.7 |
|
Merchandise inventories |
|
(44.7 |
) |
|
(256.3 |
) |
Prepaid
expenses and other current assets |
|
2.2 |
|
|
(1.2 |
) |
Prepaid
income taxes and income taxes payable |
|
(18.7 |
) |
|
(24.7 |
) |
Accounts
payable and accrued liabilities |
|
17.1 |
|
|
169.8 |
|
Changes in other long-term liabilities |
|
4.9 |
|
|
(14.8 |
) |
Net cash
flows provided by operating activities |
|
325.1 |
|
|
434.9 |
|
Cash flows from
investing activities: |
|
|
|
|
Purchase
of property and equipment |
|
(93.7 |
) |
|
(113.4 |
) |
Acquisitions, net of cash acquired of $0.0 and $0.1,
respectively |
|
— |
|
|
(8.5 |
) |
Proceeds
from divestiture |
|
727.9 |
|
|
58.5 |
|
Other |
|
1.3 |
|
|
2.8 |
|
Net cash
flows provided by (used in) investing activities |
|
635.5 |
|
|
(60.6 |
) |
Cash flows from
financing activities: |
|
|
|
|
Repayment
of acquisition-related debt |
|
(12.2 |
) |
|
(21.8 |
) |
Repurchase of common shares |
|
— |
|
|
(22.0 |
) |
Dividends
paid |
|
(157.4 |
) |
|
(155.2 |
) |
Borrowings from the revolver |
|
154.0 |
|
|
373.0 |
|
Repayments of revolver borrowings |
|
(154.0 |
) |
|
(373.0 |
) |
Issuance
of common stock, net of share repurchases for withholding
taxes |
|
(5.1 |
) |
|
(3.5 |
) |
Net cash
flows (used in) financing activities |
|
(174.7 |
) |
|
(202.5 |
) |
Exchange
rate effect on cash and cash equivalents and restricted cash |
|
(24.7 |
) |
|
28.0 |
|
Decrease
(increase) in cash held for sale |
|
10.2 |
|
|
(5.4 |
) |
Increase
in cash and cash equivalents and restricted cash |
|
771.4 |
|
|
194.4 |
|
Cash and cash
equivalents and restricted cash at beginning of period |
|
869.1 |
|
|
674.7 |
|
Cash and cash
equivalents and restricted cash at end of period |
|
$ |
1,640.5 |
|
|
$ |
869.1 |
|
|
GameStop Corp.Schedule
ISales
Mix(unaudited) |
|
|
|
13 Weeks EndedFebruary 2,
2019 |
|
14 Weeks Ended February 3, 2018 |
Net Sales (in
millions): |
|
NetSales |
|
Percentof Total |
|
Net Sales |
|
Percent of Total |
|
|
|
|
|
|
|
|
|
New video game hardware
(1) |
|
$ |
761.3 |
|
|
24.9 |
% |
|
$ |
844.0 |
|
|
25.5 |
% |
New video game
software |
|
961.4 |
|
|
31.4 |
% |
|
1,042.3 |
|
|
31.4 |
% |
Pre-owned and value
video game products |
|
521.6 |
|
|
17.0 |
% |
|
663.1 |
|
|
20.0 |
% |
Video game
accessories |
|
389.3 |
|
|
12.7 |
% |
|
327.7 |
|
|
9.9 |
% |
Digital |
|
65.4 |
|
|
2.1 |
% |
|
61.4 |
|
|
1.9 |
% |
Collectibles |
|
268.8 |
|
|
8.8 |
% |
|
260.8 |
|
|
7.9 |
% |
Other(2) |
|
95.2 |
|
|
3.1 |
% |
|
116.7 |
|
|
3.4 |
% |
Total |
|
$ |
3,063.0 |
|
|
100.0 |
% |
|
$ |
3,316.0 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended February 2,
2019 |
|
53 Weeks Ended February 3,
2018 |
Net Sales (in
millions): |
|
Net Sales |
|
Percent of Total |
|
Net Sales |
|
Percent of Total |
|
|
|
|
|
|
|
|
|
New video game hardware
(1) |
|
$ |
1,767.8 |
|
|
21.3 |
% |
|
$ |
1,791.8 |
|
|
21.0 |
% |
New video game
software |
|
2,449.7 |
|
|
29.6 |
% |
|
2,582.0 |
|
|
30.2 |
% |
Pre-owned and value
video game products |
|
1,866.3 |
|
|
22.5 |
% |
|
2,149.6 |
|
|
25.2 |
% |
Video game
accessories |
|
956.5 |
|
|
11.5 |
% |
|
784.3 |
|
|
9.2 |
% |
Digital |
|
194.0 |
|
|
2.3 |
% |
|
189.2 |
|
|
2.2 |
% |
Collectibles |
|
707.5 |
|
|
8.5 |
% |
|
636.2 |
|
|
7.4 |
% |
Other(2) |
|
343.5 |
|
|
4.3 |
% |
|
414.0 |
|
|
4.8 |
% |
Total |
|
$ |
8,285.3 |
|
|
100.0 |
% |
|
$ |
8,547.1 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
(1)
Includes sales of hardware bundles, in which physical hardware and
digital or physical software are sold together as a single SKU.
(2) Includes mobile and consumer electronics sold through our
Simply Mac and Cricket Wireless branded stores. We sold our Cricket
Wireless branded stores in January 2018. Additionally includes
sales of PC entertainment software, interactive game figures,
strategy guides, mobile and consumer electronics sold through our
Video Game Brands segments, and revenues from PowerUp Pro loyalty
members receiving Game Informer magazine in print form. |
Schedule IIGross Profit
Mix(unaudited)
|
|
13 Weeks Ended February 2, 2019 |
|
14 Weeks Ended February 3, 2018 |
Gross Profit (in
millions): |
|
GrossProfit |
|
GrossProfitPercent |
|
Gross Profit |
|
Gross Profit Percent |
|
|
|
|
|
|
|
|
|
New video game hardware
(1) |
|
$ |
43.7 |
|
|
5.7 |
% |
|
$ |
61.5 |
|
|
7.3 |
% |
New video game
software |
|
199.9 |
|
|
20.8 |
% |
|
238.9 |
|
|
22.9 |
% |
Pre-owned and value
video game products |
|
221.2 |
|
|
42.4 |
% |
|
298.1 |
|
|
45.0 |
% |
Video game
accessories |
|
117.3 |
|
|
30.1 |
% |
|
102.9 |
|
|
31.4 |
% |
Digital |
|
54.7 |
|
|
83.6 |
% |
|
54.3 |
|
|
88.4 |
% |
Collectibles |
|
84.6 |
|
|
31.5 |
% |
|
77.1 |
|
|
29.6 |
% |
Other(2) |
|
27.4 |
|
|
28.8 |
% |
|
31.9 |
|
|
27.3 |
% |
Total |
|
$ |
748.8 |
|
|
24.4 |
% |
|
$ |
864.7 |
|
|
26.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
52 Weeks Ended February 2,
2019 |
|
53 Weeks Ended February 3,
2018 |
Gross Profit (in
millions): |
|
Gross Profit |
|
Gross Profit Percent |
|
Gross Profit |
|
Gross Profit Percent |
|
|
|
|
|
|
|
|
|
New video game hardware
(1) |
|
$ |
150.0 |
|
|
8.5 |
% |
|
$ |
163.1 |
|
|
9.1 |
% |
New video game
software |
|
525.6 |
|
|
21.5 |
% |
|
590.3 |
|
|
22.9 |
% |
Pre-owned and value
video game products |
|
810.4 |
|
|
43.4 |
% |
|
977.1 |
|
|
45.5 |
% |
Video game
accessories |
|
312.5 |
|
|
32.7 |
% |
|
255.0 |
|
|
32.5 |
% |
Digital |
|
171.6 |
|
|
88.5 |
% |
|
162.4 |
|
|
85.8 |
% |
Collectibles |
|
233.3 |
|
|
33.0 |
% |
|
208.2 |
|
|
32.7 |
% |
Other(2) |
|
104.7 |
|
|
30.5 |
% |
|
128.8 |
|
|
31.1 |
% |
Total |
|
$ |
2,308.1 |
|
|
27.9 |
% |
|
$ |
2,484.9 |
|
|
29.1 |
% |
|
|
|
|
|
|
|
|
|
(1)
Includes sales of hardware bundles, in which physical hardware and
digital or physical software are sold together as a single SKU.
(2) Includes mobile and consumer electronics sold through our
Simply Mac and Cricket Wireless branded stores. We sold our Cricket
Wireless branded stores in January 2018. Additionally includes
sales of PC entertainment software, interactive game figures,
strategy guides, mobile and consumer electronics sold through our
Video Game Brands segments, and revenues from PowerUp Pro loyalty
members receiving Game Informer magazine in print form.
|
GameStop Corp.Schedule
III(in
millions)(unaudited)
Non-GAAP results
The following tables reconcile the Company's
operating earnings (loss), net income (loss) and earnings (loss)
per share as presented in its unaudited consolidated statements of
operations and prepared in accordance with Generally Accepted
Accounting Principles ("GAAP") to its adjusted operating earnings,
net income and earnings per share. The diluted weighted-average
shares outstanding used to calculate adjusted earnings per share
for the 13 and 52 weeks ended February 2, 2019 differs from GAAP
weighted-average shares outstanding and assumes the inclusion of
0.2 million and 0.2 million common stock equivalents associated
with restricted stock awards for the 13 and 52 weeks ended February
2, 2019, respectively. Under GAAP, basic and diluted
weighted-average shares outstanding are the same in periods where
there is a net loss.
|
|
13 Weeks EndedFebruary 2,
2019 |
|
14 Weeks Ended February 3, 2018 |
|
52 Weeks Ended February 2,
2019 |
|
53 Weeks Ended February 3,
2018 |
|
|
|
|
|
|
|
|
|
Adjusted
Operating Earnings from Continuing Operations |
|
|
|
|
|
|
|
|
Operating (loss)
earnings |
|
$ |
(232.1 |
) |
|
$ |
251.1 |
|
|
$ |
(702.0 |
) |
|
$ |
439.2 |
|
Property,
equipment & other asset impairments |
|
2.1 |
|
|
7.1 |
|
|
2.1 |
|
|
7.1 |
|
Goodwill
impairments |
|
413.4 |
|
|
— |
|
|
970.7 |
|
|
— |
|
Intangible
impairments |
|
12.9 |
|
|
11.0 |
|
|
43.1 |
|
|
11.0 |
|
Store closure
costs |
|
— |
|
|
0.3 |
|
|
— |
|
|
(0.1 |
) |
Business
divestitures and other |
|
6.2 |
|
|
8.6 |
|
|
17.4 |
|
|
1.3 |
|
Adjusted operating
earnings - continuing operations |
|
$ |
202.5 |
|
|
$ |
278.1 |
|
|
$ |
331.3 |
|
|
$ |
458.5 |
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Earnings from Discontinued Operations |
|
|
|
|
|
|
|
|
Operating earnings
(loss) from discontinued operations |
|
$ |
122.0 |
|
|
$ |
(347.8 |
) |
|
$ |
177.1 |
|
|
$ |
(303.6 |
) |
Acquisition
costs |
|
— |
|
|
(5.0 |
) |
|
— |
|
|
(10.7 |
) |
Property,
equipment & other asset impairments |
|
— |
|
|
15.4 |
|
|
— |
|
|
15.4 |
|
Goodwill
impairments |
|
— |
|
|
32.8 |
|
|
— |
|
|
32.8 |
|
Intangible
impairments |
|
— |
|
|
328.8 |
|
|
— |
|
|
328.8 |
|
Store closure
costs |
|
— |
|
|
7.5 |
|
|
1.4 |
|
|
14.1 |
|
Business
divestitures and other |
|
(100.8 |
) |
|
— |
|
|
(100.8 |
) |
|
— |
|
Adjusted operating
earnings - discontinued operations |
|
$ |
21.2 |
|
|
$ |
31.7 |
|
|
$ |
77.7 |
|
|
$ |
76.8 |
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Earnings - Total Company |
|
|
|
|
|
|
|
|
Operating (loss)
earnings |
|
$ |
(110.1 |
) |
|
$ |
(96.7 |
) |
|
$ |
(524.9 |
) |
|
$ |
135.6 |
|
Acquisition
costs |
|
— |
|
|
(5.0 |
) |
|
— |
|
|
(10.7 |
) |
Property,
equipment & other asset impairments |
|
2.1 |
|
|
22.5 |
|
|
2.1 |
|
|
22.5 |
|
Goodwill
impairments |
|
413.4 |
|
|
32.8 |
|
|
970.7 |
|
|
32.8 |
|
Intangible
impairments |
|
12.9 |
|
|
339.8 |
|
|
43.1 |
|
|
339.8 |
|
Store closure
costs |
|
— |
|
|
7.8 |
|
|
1.4 |
|
|
14.0 |
|
Business
divestitures and other |
|
(94.6 |
) |
|
8.6 |
|
|
(83.4 |
) |
|
1.3 |
|
Adjusted operating
earnings - total company |
|
$ |
223.7 |
|
|
$ |
309.8 |
|
|
$ |
409.0 |
|
|
$ |
535.3 |
|
|
|
13 Weeks EndedFebruary 2,
2019 |
|
14 Weeks Ended February 3, 2018 |
|
52 Weeks Ended February 2,
2019 |
|
53 Weeks Ended February 3,
2018 |
Adjusted Net
Income from Continuing Operations |
|
|
|
|
|
|
|
|
Net (loss) income from
continuing operations |
|
$ |
(268.5 |
) |
|
$ |
116.9 |
|
|
$ |
(794.8 |
) |
|
$ |
230.4 |
|
Property,
equipment & other asset impairments |
|
2.1 |
|
|
7.1 |
|
|
2.1 |
|
|
7.1 |
|
Goodwill
impairment |
|
413.4 |
|
|
— |
|
|
970.7 |
|
|
— |
|
Intangible
impairments |
|
12.9 |
|
|
11.0 |
|
|
43.1 |
|
|
11.0 |
|
Store closure
costs |
|
— |
|
|
0.3 |
|
|
— |
|
|
(0.1 |
) |
Business
divestitures and other |
|
6.2 |
|
|
8.6 |
|
|
17.4 |
|
|
1.3 |
|
Non-operating
tax charge |
|
0.7 |
|
|
— |
|
|
30.3 |
|
|
— |
|
Tax effect of
non-GAAP adjustments |
|
(18.3 |
) |
|
36.3 |
|
|
(50.4 |
) |
|
36.4 |
|
Tax reform |
|
— |
|
|
(3.0 |
) |
|
— |
|
|
(3.0 |
) |
Adjusted net income
from continuing operations |
|
$ |
148.5 |
|
|
$ |
177.2 |
|
|
$ |
218.4 |
|
|
$ |
283.1 |
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income from Discontinued Operations |
|
|
|
|
|
|
|
|
Net income (loss) from
discontinued operations, net of tax |
|
$ |
80.8 |
|
|
$ |
(222.8 |
) |
|
$ |
121.8 |
|
|
$ |
(195.7 |
) |
Acquisition
costs |
|
— |
|
|
(5.0 |
) |
|
— |
|
|
(10.7 |
) |
Property,
equipment & other asset impairments |
|
— |
|
|
15.4 |
|
|
— |
|
|
15.4 |
|
Goodwill
impairment |
|
— |
|
|
32.8 |
|
|
— |
|
|
32.8 |
|
Intangible
impairments |
|
— |
|
|
328.8 |
|
|
— |
|
|
328.8 |
|
Store closure
costs |
|
— |
|
|
7.5 |
|
|
1.4 |
|
|
14.1 |
|
Business
divestitures and other |
|
(100.8 |
) |
|
— |
|
|
(100.8 |
) |
|
— |
|
Tax effect of
non-GAAP adjustments |
|
35.4 |
|
|
(128.9 |
) |
|
35.1 |
|
|
(129.2 |
) |
Tax reform |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted net income
from discontinued operations |
|
$ |
15.4 |
|
|
$ |
27.8 |
|
|
$ |
57.5 |
|
|
$ |
55.5 |
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income - Total Company |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(187.7 |
) |
|
$ |
(105.9 |
) |
|
$ |
(673.0 |
) |
|
$ |
34.7 |
|
Acquisition
costs |
|
— |
|
|
(5.0 |
) |
|
— |
|
|
(10.7 |
) |
Property,
equipment & other asset impairments |
|
2.1 |
|
|
22.5 |
|
|
2.1 |
|
|
22.5 |
|
Goodwill
impairment |
|
413.4 |
|
|
32.8 |
|
|
970.7 |
|
|
32.8 |
|
Intangible
impairments |
|
12.9 |
|
|
339.8 |
|
|
43.1 |
|
|
339.8 |
|
Store closure
costs |
|
— |
|
|
7.8 |
|
|
1.4 |
|
|
14.0 |
|
Business
divestitures and other |
|
(94.6 |
) |
|
8.6 |
|
|
(83.4 |
) |
|
1.3 |
|
Non-operating tax charge |
|
0.7 |
|
|
— |
|
|
30.3 |
|
|
— |
|
Tax effect of
non-GAAP adjustments |
|
17.1 |
|
|
(92.6 |
) |
|
(15.3 |
) |
|
(92.8 |
) |
Tax reform |
|
— |
|
|
(3.0 |
) |
|
— |
|
|
(3.0 |
) |
Adjusted net income -
total company |
|
$ |
163.9 |
|
|
$ |
205.0 |
|
|
$ |
275.9 |
|
|
$ |
338.6 |
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share - total company |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.60 |
|
|
$ |
2.02 |
|
|
$ |
2.70 |
|
|
$ |
3.34 |
|
Diluted |
|
$ |
1.60 |
|
|
$ |
2.02 |
|
|
$ |
2.70 |
|
|
$ |
3.34 |
|
|
|
|
|
|
|
|
|
|
Dividend per common
share |
|
$ |
0.38 |
|
|
$ |
0.38 |
|
|
$ |
1.52 |
|
|
$ |
1.52 |
|
|
|
|
|
|
|
|
|
|
Number of shares used
in adjusted calculation |
|
|
|
|
|
|
|
|
Basic |
|
102.2 |
|
|
101.5 |
|
|
102.1 |
|
|
101.4 |
|
Diluted |
|
102.4 |
|
|
101.6 |
|
|
102.3 |
|
|
101.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GameStop Corp.Schedule
IV(in
millions)(unaudited)
Non-GAAP resultsThe 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.
|
|
52 weeks endedFebruary 2,
2019 |
|
53 weeks ended February 3, 2018 |
Net cash flows provided
by operating activities |
|
$ |
325.1 |
|
|
$ |
434.9 |
|
Purchase
of property and equipment |
|
(93.7 |
) |
|
(113.4 |
) |
Other
investing activities |
|
1.3 |
|
|
2.8 |
|
Free cash flow |
|
$ |
232.7 |
|
|
$ |
324.3 |
|
Contact
GameStop Corp. Investor Relations
(817) 424-2001
investorrelations@gamestop.com
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