Diluted EPS increases 15% year-over-year;
exceeds high-end of guidance by $0.08
Same store sales increase 8.6% driven by 10%
growth in new software sales
Non-GAAP digital receipts grow 17%
GameStop Corp. (NYSE: GME), a global family of specialty retail
brands that makes the most popular technologies affordable and
simple, today reported sales and earnings for the first quarter
ended May 2, 2015.
Paul Raines, chief executive officer, stated, “Our first quarter
results exceeded expectations, displaying our market leadership and
our ability to drive and leverage our core video game business and
expand our diversified businesses to deliver healthy profits and
solid top-line growth. This performance confirms that our effort to
transform GameStop into a family of specialty brands is the right
strategy to drive durable revenues and shareholder value.”
The following table summarizes the first quarter results for
fiscal 2015 and 2014 (in millions, except per share amounts):
Quarter
Ended May 2, 2015 May 3,
2014 Change Revenues $2,060.6
$1,996.3 3.2% Same store sales 8.6% 5.8% Operating income $123.9
$105.9 17.0% Net income $73.8 $68.0 8.5% Diluted EPS $0.68 $0.59
15.3%
Q1 2015 Financial
Summary
Total global sales rose 3.2% to $2.06 billion (an 8.1% increase
in constant currency) primarily driven by 9.6% growth (a 15.8%
increase in constant currency) in new software sales. The company
captured significant market share of the key quarterly title
releases, leading to record first quarter new software market share
of 45%. The Pre-owned category declined 3.4%; however, it increased
0.8% in constant currency.
Consolidated comparable store sales increased 8.6% (+9.1% in the
U.S. and +6.9% internationally), led by double digit same store
sales increases in Australia and Canada.
Non-GAAP digital receipts increased 17.2% (a 23.3% increase in
constant currency) to $222.2 million, or $46.0 million of sales on
a GAAP basis. Strong sales of downloadable content for new
releases, such as Evolve and Mortal Kombat X, along with increases
in mobile game downloads and Steam currency, were the primary
growth drivers during the quarter.
Sales in the mobile and consumer electronics category rose 33.9%
(a 34.6% increase in constant currency) to $136.8 million.
Technology Brands revenues increased 70% to $102.2 million, driven
by the addition of 65 new stores during the first quarter. As a
result of these openings, Spring Mobile is now AT&T’s second
largest authorized reseller in the United States.
Net earnings exceeded the high-end of guidance, increasing 8.5%
to $73.8 million, or $0.68 per diluted share, compared to net
earnings of $68.0 million, or $0.59 per diluted share, in the prior
year quarter. For the first quarter of 2015, diluted earnings per
share increased 15.3% compared to the prior year quarter. The $73.8
million of earnings represents the highest level of profitability
in a first quarter since the first quarter of 2011. Foreign
currency exchange rate changes did not materially impact earnings
results for the first quarter.
Capital Allocation
Update
During the first quarter of 2015, the company repurchased 1.19
million shares at an average price of $39.03 per share, or $46.4
million of stock. As of the end of the first quarter, there was
$400.9 million remaining on the existing repurchase
authorization.
GameStop’s board of directors also declared a quarterly cash
dividend of $0.36 per common share payable on June 23, 2015, to
shareholders of record as of the close of business on June 10,
2015.
Earnings Guidance
For the second quarter of fiscal 2015, GameStop expects
comparable store sales to range from flat to +3.0%. Diluted
earnings per share are expected to range from $0.21 to $0.25,
representing a decline of 4.5% to a 13.5% increase over the prior
year quarter.
For fiscal year 2015, the company is raising its previously
announced full year diluted earnings per share guidance range from
$3.60 to $3.80 to $3.63 to $3.83 to account for the reduction in
shares outstanding. Full year comparable store sales are still
expected to range from +1.0% to +6.0%.
Note: Guidance only includes the effect of the shares
repurchased through the first quarter of 2015.
Conference Call
Information
A conference call with GameStop Corp.’s management is scheduled
for May 28, 2015 at 4:00 p.m. CDT to discuss the company’s
financial results. The phone number for the call is 888-256-1014
and the pass code is 6663335. 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. (NYSE: GME), a Fortune 500 and S&P 500
company headquartered in Grapevine, Texas, is a global,
multichannel video game, consumer electronics and wireless services
retailer. GameStop operates more than 6,700 stores across 14
countries. The company’s consumer product network also includes
www.gamestop.com; www.Kongregate.com, a leading browser-based game
site; and Game Informer® magazine, the world’s leading print and
digital video game publication. In addition, our Technology Brands
segment includes our Simply Mac and Spring Mobile stores. Simply
Mac, www.simplymac.com, operates 71 stores, selling the full line
of Apple products, including laptops, tablets, and smartphones and
offering Apple certified warranty and repair services. Spring
Mobile, http://springmobile.com, sells post-paid AT&T services
and wireless products through its 410 AT&T branded stores and
offers pre-paid wireless services, devices and related accessories
through its 68 Cricket branded stores in select markets in the
U.S.
General information about GameStop Corp. can be obtained at the
company's corporate website. Follow GameStop on Twitter @
www.twitter.com/GameStop and find GameStop on Facebook @
www.facebook.com/GameStop.
Non-GAAP Measures
As a supplement to our financial results presented in accordance
with U.S. generally accepted accounting principles (GAAP), GameStop
uses certain non-GAAP measures, such as digital receipts and
constant currency, to provide a clearer perspective of the current
operating performance of the company. GameStop defines digital
receipts as the full amount paid by the customer for digital
content at the time of sale and/or the value attributed to digital
content when physical and digital products are sold combined.
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 constant
currency information 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.
Safe Harbor
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements may include, but are not limited to, the
outlook for the second quarter and fiscal 2015, future financial
and operating results, projected store openings, the company's
plans, objectives, expectations and intentions, and other
statements that are not historical facts. Such statements are based
upon the current beliefs and expectations of GameStop's management
and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking
statements. GameStop undertakes no obligation to publicly update or
revise any forward-looking statements. The following factors, among
others, could cause actual results to differ from those set forth
in the forward-looking statements: the inability to obtain
sufficient quantities of product to meet consumer demand, including
console hardware and accessories; the timing of release and
consumer demand for new and pre-owned video game titles; the risks
associated with international operations, wireless industry
partnerships and operations and the integration of acquisitions;
the impact of increased competition and changing technology in the
video game industry, including browser and mobile games and
alternative methods of distribution; and economic, regulatory and
other events, including litigation, that could reduce or impact
consumer demand or affect the company’s business. Additional
factors that could cause GameStop's results to differ materially
from those described in the forward-looking statements can be found
in GameStop's Annual Report on Form 10-K for the fiscal year ended
Jan. 31, 2015 filed with the SEC and available at the SEC's
Internet site at http://www.sec.gov or
http://investor.GameStop.com.
GameStop Corp.
Condensed Consolidated Statements of
Operations
(in millions, except per share data) (unaudited)
13 weeks 13 weeks ended ended May 2, 2015 May 3, 2014
Net sales $ 2,060.6 $ 1,996.3 Cost of sales 1,421.6
1,369.9 Gross profit 639.0 626.4
Selling, general and administrative expenses 479.3 481.0
Depreciation and amortization 35.8 39.5
Operating earnings 123.9 105.9 Interest expense, net
5.4 0.6 Earnings before
income tax expense 118.5 105.3 Income tax expense
44.7 37.3 Net income $ 73.8 $
68.0 Net income per common share: Basic $ 0.68 $ 0.59
Diluted $ 0.68 $ 0.59 Dividends per common share $ 0.36 $
0.33 Weighted average common shares outstanding: Basic 107.8
115.1 Diluted 108.4 115.9
Percentage of Net
Sales:
Net sales 100.0 % 100.0 % Cost of sales 69.0 %
68.6 % Gross profit 31.0 % 31.4 % Selling, general
and administrative expenses 23.3 % 24.1 % Depreciation and
amortization 1.7 % 2.0 % Operating earnings
6.0 % 5.3 % Interest expense, net 0.2 % 0.0 %
Earnings before income tax expense 5.8 % 5.3 %
Income tax expense 2.2 % 1.9 % Net income
3.6 % 3.4 %
GameStop Corp.
Condensed Consolidated Balance Sheets (in millions)
(unaudited) May 2, May 3, 2015 2014
ASSETS:
Current assets:
Cash and cash equivalents $ 369.8 $ 208.9 Receivables, net 99.5
86.0 Merchandise inventories, net 1,076.7 1,200.1 Prepaid expenses
and other current assets 145.2 90.2 Deferred income taxes
65.6 57.2 Total current assets 1,756.8 1,642.4
Property and equipment: Land 18.5 21.0 Buildings &
leasehold improvements 617.6 620.8 Fixtures and equipment
903.9 852.3 Total property and equipment 1,540.0 1,494.1
Less accumulated depreciation and amortization
1,091.8 1,029.8 Net property and equipment 448.2
464.3 Goodwill 1,393.1 1,422.7 Other noncurrent
assets 348.5 278.1 Total assets $ 3,946.6 $ 3,807.5
LIABILITIES AND STOCKHOLDERS' EQUITY: Current
liabilities: Accounts payable $ 585.1 $ 612.3 Accrued liabilities
709.2 717.3 Income taxes payable 49.3 17.2 Notes payable 2.1
77.7 Total current liabilities 1,345.7 1,424.5
Other long-term liabilities 178.2 114.9 Long-term debt 350.0
0.9 Total liabilities 1,873.9 1,540.3 Stockholders'
equity 2,072.7 2,267.2 Total liabilities and
stockholders' equity $ 3,946.6 $ 3,807.5
GameStop
Corp. Schedule I Sales Mix
(unaudited) 13 Weeks Ended 13 Weeks
Ended May 2, 2015 May 3, 2014 Net
Percent Net Percent Sales of
Total Sales of Total Net Sales (in millions):
New video game hardware $ 439.7 21.3 % $ 438.0 21.9 % New
video game software 613.6 29.8 % 559.9 28.0 % Pre-owned and value
video game products 582.4 28.3 % 602.9 30.2 % Video game
accessories 150.5 7.3 % 145.1 7.3 % Digital 46.0 2.2 % 56.1 2.8 %
Mobile and consumer electronics 136.8 6.6 % 102.2 5.1 % Other 91.6
4.5 % 92.1 4.7 % Total $ 2,060.6 100.0
% $ 1,996.3 100.0 %
Schedule II Gross Profit Mix
(unaudited) 13 Weeks Ended 13 Weeks
Ended May 2, 2015 May 3, 2014 Gross
Gross Gross Profit Gross Profit
Profit Percent Profit Percent
Gross Profit (in millions): New video game hardware $ 37.2
8.5 % $ 44.7 10.2 % New video game software 138.7 22.6 % 127.2 22.7
% Pre-owned and value video game products 286.0 49.1 % 298.4 49.5 %
Video game accessories 55.8 37.1 % 55.0 37.9 % Digital 35.4 77.0 %
35.8 63.8 % Mobile and consumer electronics 54.5 39.8 % 37.0 36.2 %
Other 31.4 34.3 % 28.3 30.7 % Total $ 639.0 31.0 % $
626.4 31.4 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150528006466/en/
Matt HodgesVice President, Public and Investor RelationsGameStop
Corp.(817) 424-2130
GameStop (NYSE:GME)
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