Continued strength in Nintendo Switch sales helps
drive a 1.9% increase in same store sales
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 second quarter
ended July 29, 2017.
Paul Raines, chief executive officer, stated,
“Our second quarter sales results were driven by continued strong
demand for Nintendo Switch and Collectibles. Looking at the second
half of 2017, the Nintendo Switch, the launch of Microsoft’s Xbox
One X, and a solid slate of AAA titles should drive growth in the
video game category. In addition, we expect that our Technology
Brands AT&T Wireless business will benefit from a boost in
consumer demand driven by the launch of innovative new mobile
handsets, including Apple’s next-generation iPhone.”
Second Quarter ResultsTotal
global sales increased 3.4% to $1.69 billion, resulting in
consolidated comparable store sales growth of 1.9% (-1.4% in the
U.S. and +9.8% internationally). New hardware sales increased
14.8%, led by continued demand for Nintendo Switch. New software
sales and pre-owned sales declined 3.4% and 7.5%, respectively,
impacted by lagging Xbox One sales.
Worldwide omnichannel sales increased by 86.2%
as the company promoted and secured leading market share of
Nintendo Switch. During the launch and rollout, the company
leveraged all of its sales platforms, including website,
web-in-store, pickup-at-store, ship-from-store, and mobile.
Digital sales grew 28.1% to $46.5 million, while
non-GAAP digital receipts increased 17.4% to $241.4 million. The
growth was driven primarily by downloadable content and mobile.
Collectibles sales increased 36.1% to $122.5
million, driven by an assortment of licensed merchandise including
Pokémon and Marvel products. The company added five Collectibles
stores during the quarter, bringing the total global portfolio to
99 stores. The Collectibles business is on track to meet its 2017
revenue target of $650 million to $700 million.
Technology Brands sales increased 7.0% to $188.3
million, driven by the year-over-year growth in our AT&T
authorized retail stores. Operating earnings increased 7.9% to
$15.0 million.
GameStop’s second quarter net earnings were
$22.2 million, or $0.22 per diluted share, compared to net earnings
of $27.9 million, or $0.27 per diluted share in the prior-year
quarter. The second quarter results include a gain of $7.3 million
(both before and after tax) related to the sale of Kongregate,
which led to a lower effective tax rate.
Excluding this gain, GameStop's adjusted net
earnings for the second quarter were $14.9 million, compared to
adjusted net earnings of $27.9 million in the prior-year quarter.
Adjusted diluted earnings per share were $0.15 compared to adjusted
diluted earnings per share of $0.27 in the prior-year quarter.
A reconciliation of non-GAAP results, including
adjusted net income, operating earnings and Technology Brands
operating earnings to its closest GAAP measure is included with
this release (Schedule III).
Capital Allocation UpdateOn
August 21, 2017, GameStop’s board of directors declared a quarterly
cash dividend of $0.38 per common share payable on September 21,
2017 to shareholders of record as of the close of business on
September 8, 2017.
Earnings OutlookThe company is
reiterating its full-year diluted earnings per share guidance of
$3.10 to $3.40, and given the success of hardware sales to date, we
now expect full-year comparable store sales to be at the high end
of our previously stated guidance range of -5.0% to 0.0%.
Conference Call InformationA
conference call with GameStop Corp.’s management is scheduled for
August 24, 2017 at 4:00 p.m. CT to discuss the company’s financial
results. The phone number for the call is 877-857-6149 and the
passcode is 6093871. 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. (NYSE:GME), a Fortune 500 company headquartered
in Grapevine, Texas, is a global, multichannel video game,
consumer electronics and wireless services
retailer. GameStop operates more than 7,400 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. Our Technology Brands segment includes more
than 1,500 Simply Mac, Spring Mobile AT&T and Cricket stores.
Spring Mobile, www.springmobile.com, sells all of
AT&T’s products and services, including DIRECTV and offers
pre-paid wireless services, devices and related accessories through
its Cricket branded stores in select markets in the U.S. Simply
Mac, www.simplymac.com, 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 MeasuresAs 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, digital receipts and constant currency. We
believe these non-GAAP financial measures provide useful
information to investors in evaluating our core operating
performance. 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 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.
Safe HarborThis presentation
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 fiscal 2017,
future financial and operating results and projections, projected
store openings, timing and terms of potential acquisitions, 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; our
ability to continue to expand, and successfully open and operate
new stores for, our collectibles and tech brands businesses; 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 timing and amount of
recognition of tax attributes; the risks associated with
international operations, wireless industry partnerships and
operations and the completion and integration of acquisitions;
increased competition and changing technology in the video game
industry, including browser and mobile games and digital
distribution of console games, and the impact of that competition
and those changes on physical video game sales; the costs and
consequences of legal proceedings and tax audits; and 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. 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. 28, 2017 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 ended July 29,
2017 |
|
13 weeks ended July 30,
2016 |
Net sales |
|
$ |
1,687.6 |
|
|
$ |
1,631.8 |
|
Cost of sales |
|
1,063.9 |
|
|
1,014.1 |
|
Gross
profit |
|
623.7 |
|
|
617.7 |
|
Selling, general and
administrative expenses |
|
542.4 |
|
|
518.4 |
|
Depreciation and
amortization |
|
37.7 |
|
|
41.0 |
|
Operating
earnings |
|
43.6 |
|
|
58.3 |
|
Interest expense,
net |
|
14.4 |
|
|
13.6 |
|
Earnings
before income tax expense |
|
29.2 |
|
|
44.7 |
|
Income tax expense |
|
7.0 |
|
|
16.8 |
|
Net
income |
|
$ |
22.2 |
|
|
$ |
27.9 |
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
Basic |
|
$ |
0.22 |
|
|
$ |
0.27 |
|
Diluted |
|
$ |
0.22 |
|
|
$ |
0.27 |
|
|
|
|
|
|
Dividends per common
share |
|
$ |
0.38 |
|
|
$ |
0.37 |
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
Basic |
|
101.4 |
|
|
104.0 |
|
Diluted |
|
101.5 |
|
|
104.3 |
|
|
|
|
|
|
|
|
|
|
|
Percentage of Net
Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
63.0 |
% |
|
62.1 |
% |
Gross
profit |
|
37.0 |
% |
|
37.9 |
% |
Selling, general and
administrative expenses |
|
32.2 |
% |
|
31.8 |
% |
Depreciation and
amortization |
|
2.2 |
% |
|
2.5 |
% |
Operating
earnings |
|
2.6 |
% |
|
3.6 |
% |
Interest expense,
net |
|
0.9 |
% |
|
0.9 |
% |
Earnings
before income tax expense |
|
1.7 |
% |
|
2.7 |
% |
Income tax expense |
|
0.4 |
% |
|
1.0 |
% |
Net
income |
|
1.3 |
% |
|
1.7 |
% |
|
|
|
|
|
|
|
GameStop Corp. |
Condensed Consolidated Statements of
Operations |
(in millions, except per share
data) |
(unaudited) |
|
|
|
|
|
|
|
26 weeks ended July 29,
2017 |
|
26 weeks ended July 30,
2016 |
Net sales |
|
$ |
3,733.5 |
|
|
$ |
3,603.3 |
|
Cost of sales |
|
2,407.3 |
|
|
2,310.1 |
|
Gross
profit |
|
1,326.2 |
|
|
1,293.2 |
|
Selling, general and
administrative expenses |
|
1,105.9 |
|
|
1,039.2 |
|
Depreciation and
amortization |
|
75.6 |
|
|
81.7 |
|
Operating
earnings |
|
144.7 |
|
|
172.3 |
|
Interest expense,
net |
|
28.3 |
|
|
24.4 |
|
Earnings
before income tax expense |
|
116.4 |
|
|
147.9 |
|
Income tax expense |
|
35.2 |
|
|
54.2 |
|
Net
income |
|
$ |
81.2 |
|
|
$ |
93.7 |
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
Basic |
|
$ |
0.80 |
|
|
$ |
0.90 |
|
Diluted |
|
$ |
0.80 |
|
|
$ |
0.90 |
|
|
|
|
|
|
Dividends per common
share |
|
$ |
0.76 |
|
|
$ |
0.74 |
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
Basic |
|
101.3 |
|
|
103.9 |
|
Diluted |
|
101.4 |
|
|
104.2 |
|
|
|
|
|
|
|
|
|
|
|
Percentage of Net
Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
% |
|
100.0 |
% |
Cost of sales |
|
64.5 |
% |
|
64.1 |
% |
Gross
profit |
|
35.5 |
% |
|
35.9 |
% |
Selling, general and
administrative expenses |
|
29.6 |
% |
|
28.8 |
% |
Depreciation and
amortization |
|
2.0 |
% |
|
2.3 |
% |
Operating
earnings |
|
3.9 |
% |
|
4.8 |
% |
Interest expense,
net |
|
0.8 |
% |
|
0.7 |
% |
Earnings
before income tax expense |
|
3.1 |
% |
|
4.1 |
% |
Income tax expense |
|
0.9 |
% |
|
1.5 |
% |
Net
income |
|
2.2 |
% |
|
2.6 |
% |
|
|
|
|
|
|
|
GameStop Corp. |
Condensed Consolidated Balance
Sheets |
(in millions) |
(unaudited) |
|
|
|
|
|
|
|
July 29, 2017 |
|
July 30, 2016 |
ASSETS: |
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
262.1 |
|
|
$ |
289.5 |
|
Receivables, net |
|
185.4 |
|
|
126.6 |
|
Merchandise inventories, net |
|
1,140.6 |
|
|
1,093.0 |
|
Prepaid
expenses and other current assets |
|
202.5 |
|
|
175.3 |
|
Total
current assets |
|
1,790.6 |
|
|
1,684.4 |
|
Property and
equipment: |
|
|
|
|
Land |
|
19.7 |
|
|
18.1 |
|
Buildings
and leasehold improvements |
|
753.4 |
|
|
698.8 |
|
Fixtures
and equipment |
|
965.7 |
|
|
899.9 |
|
Total
property and equipment |
|
1,738.8 |
|
|
1,616.8 |
|
Less
accumulated depreciation |
|
1,281.4 |
|
|
1,135.9 |
|
Net
property and equipment |
|
457.4 |
|
|
480.9 |
|
Goodwill |
|
1,698.0 |
|
|
1,490.0 |
|
Other noncurrent
assets |
|
663.8 |
|
|
478.3 |
|
Total
assets |
|
$ |
4,609.8 |
|
|
$ |
4,133.6 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
469.8 |
|
|
$ |
370.7 |
|
Accrued
liabilities |
|
855.8 |
|
|
682.4 |
|
Income
taxes payable |
|
12.1 |
|
|
3.4 |
|
Total
current liabilities |
|
1,337.7 |
|
|
1,056.5 |
|
Other long-term
liabilities |
|
144.0 |
|
|
112.6 |
|
Long-term debt,
net |
|
816.4 |
|
|
813.5 |
|
Total
liabilities |
|
2,298.1 |
|
|
1,982.6 |
|
Stockholders’
equity |
|
2,311.7 |
|
|
2,151.0 |
|
Total liabilities and
stockholders’ equity |
|
$ |
4,609.8 |
|
|
$ |
4,133.6 |
|
|
|
|
|
|
|
|
|
|
GameStop Corp. |
|
Schedule I |
Sales Mix |
(unaudited) |
|
|
|
|
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
July 29, 2017 |
|
July 30, 2016 |
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales (in
millions): |
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
New video game
hardware |
|
$ |
248.4 |
|
|
14.7 |
% |
|
$ |
216.4 |
|
|
13.3 |
% |
New video game
software |
|
369.3 |
|
|
21.9 |
% |
|
382.2 |
|
|
23.4 |
% |
Pre-owned and value
video game products |
|
501.8 |
|
|
29.7 |
% |
|
542.6 |
|
|
33.3 |
% |
Video game
accessories |
|
144.1 |
|
|
8.5 |
% |
|
119.5 |
|
|
7.3 |
% |
Digital |
|
46.5 |
|
|
2.8 |
% |
|
36.3 |
|
|
2.2 |
% |
Technology Brands |
|
188.3 |
|
|
11.2 |
% |
|
175.9 |
|
|
10.8 |
% |
Collectibles |
|
122.5 |
|
|
7.3 |
% |
|
90.0 |
|
|
5.5 |
% |
Other |
|
66.7 |
|
|
3.9 |
% |
|
68.9 |
|
|
4.2 |
% |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,687.6 |
|
|
100.0 |
% |
|
$ |
1,631.8 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule II |
Gross Profit Mix |
(unaudited) |
|
|
|
|
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
July 29, 2017 |
|
July 30, 2016 |
Gross Profit (in
millions): |
|
GrossProfit |
|
GrossProfitPercent |
|
Gross Profit |
|
Gross Profit Percent |
|
|
|
|
|
|
|
|
|
New video game
hardware |
|
$ |
26.7 |
|
|
10.7 |
% |
|
$ |
30.0 |
|
|
13.9 |
% |
New video game
software |
|
81.8 |
|
|
22.2 |
% |
|
98.1 |
|
|
25.7 |
% |
Pre-owned and value
video game products |
|
225.6 |
|
|
45.0 |
% |
|
244.0 |
|
|
45.0 |
% |
Video game
accessories |
|
47.7 |
|
|
33.1 |
% |
|
45.7 |
|
|
38.2 |
% |
Digital |
|
37.9 |
|
|
81.5 |
% |
|
32.7 |
|
|
90.1 |
% |
Technology Brands |
|
138.9 |
|
|
73.8 |
% |
|
110.7 |
|
|
62.9 |
% |
Collectibles |
|
43.2 |
|
|
35.3 |
% |
|
34.7 |
|
|
38.6 |
% |
Other |
|
21.9 |
|
|
32.8 |
% |
|
21.8 |
|
|
31.6 |
% |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
623.7 |
|
|
37.0 |
% |
|
$ |
617.7 |
|
|
37.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GameStop Corp.
Schedule III(in
millions, except per share
data)(unaudited)
Non-GAAP resultsThe following table reconciles
the Company's operating earnings, net income and earnings per share
as presented in its unaudited consolidated statements of operations
and prepared in accordance with GAAP to its adjusted operating
earnings, net income and earnings per share:
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
26 Weeks Ended |
|
26 Weeks Ended |
|
|
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
Technology
Brands Adjusted Operating Earnings |
|
|
|
|
|
|
|
|
Technology Brands
operating earnings |
|
$ |
15.0 |
|
|
$ |
13.9 |
|
|
$ |
26.1 |
|
|
$ |
32.7 |
|
Store
closure costs |
|
— |
|
|
— |
|
|
7.3 |
|
|
— |
|
Technology Brands
adjusted operating earnings |
|
$ |
15.0 |
|
|
$ |
13.9 |
|
|
$ |
33.4 |
|
|
$ |
32.7 |
|
|
|
|
|
|
|
|
|
|
Consolidated
Adjusted Operating Earnings |
|
|
|
|
|
|
|
|
Operating earnings |
|
$ |
43.6 |
|
|
$ |
58.3 |
|
|
$ |
144.7 |
|
|
$ |
172.3 |
|
Store
closure costs |
|
— |
|
|
— |
|
|
7.3 |
|
|
— |
|
Business
divestitures and other |
|
(7.3 |
) |
|
— |
|
|
(7.3 |
) |
|
4.1 |
|
Adjusted operating
earnings |
|
$ |
36.3 |
|
|
$ |
58.3 |
|
|
$ |
144.7 |
|
|
$ |
176.4 |
|
|
|
|
|
|
|
|
|
|
Consolidated
Adjusted Net Income |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
22.2 |
|
|
$ |
27.9 |
|
|
$ |
81.2 |
|
|
$ |
93.7 |
|
Store
closure costs |
|
— |
|
|
— |
|
|
7.3 |
|
|
— |
|
Business
divestitures and other |
|
(7.3 |
) |
|
— |
|
|
(7.3 |
) |
|
4.1 |
|
Tax
effect of non-GAAP adjustments |
|
— |
|
|
— |
|
|
(2.7 |
) |
|
(1.5 |
) |
Adjusted net
income |
|
$ |
14.9 |
|
|
$ |
27.9 |
|
|
$ |
78.5 |
|
|
$ |
96.3 |
|
|
|
|
|
|
|
|
|
|
Adjusted
Earnings Per Share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.15 |
|
|
$ |
0.27 |
|
|
$ |
0.77 |
|
|
$ |
0.93 |
|
Diluted |
|
$ |
0.15 |
|
|
$ |
0.27 |
|
|
$ |
0.77 |
|
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
Number of shares used
in adjusted calculation |
|
|
|
|
|
|
|
|
Basic |
|
101.4 |
|
|
104.0 |
|
|
101.3 |
|
|
103.9 |
|
Diluted |
|
101.5 |
|
|
104.3 |
|
|
101.4 |
|
|
104.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact
Mike Loftus
Vice President, Global Controller and Investor Relations
GameStop Corp.
(817) 424-2130
GameStop (NYSE:GME)
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From Apr 2024 to May 2024
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From May 2023 to May 2024