GameStop Corp. (NYSE: GME), today reported results
for the fourth quarter and fiscal year ended January 30,
2021.
Fourth Quarter Fiscal 2020 Overview
- Comparable store sales increased 6.5%;
- Net sales were $2.122 billion compared to $2.194 billion in the
fiscal 2019 fourth quarter, reflecting an operating environment
that included a 12% decrease in the store base due to the Company’s
strategic de-densification efforts and a reduction of approximately
27% in European store operating days during the quarter as a result
of temporary store closures in response to the COVID-19
pandemic;
- Global E-Commerce sales (included in comparable store sales)
increased 175% and represented 34% of net sales in the fiscal 2020
fourth quarter versus 12% of net sales in the fiscal 2019 fourth
quarter;
- Gross margin was 21.1%, a decline of 610 basis points compared
to the fiscal 2019 fourth quarter, reflecting an expected mix shift
toward lower margin console sales in response to the launch of
generation 9 consoles, increased freight and credit card fees
associated with the shift to E-Commerce sales, and a broader
promotional stance;
- Selling, general and administrative expenses were $419.1
million, a decline of $92.6 million, or 18%, from $511.7 million in
the fiscal 2019 fourth quarter, driven by the Company’s cost
optimization initiatives;
- Income tax expense was a benefit of $69.7 million due to a
change in the tax status of certain foreign entities, and the
impact of the CARES Act, including tax benefits associated with the
availability of a five-year carryback period for certain current
year tax losses (which compares to income tax expense of $43.8
million in the fiscal 2019 fourth quarter), and;
- Net income was $80.5 million, or $1.19 per diluted share on
67.8 million shares outstanding and included a $1.03 per share tax
benefit as described above, as compared to diluted earnings per
share of $0.32 in the fiscal 2019 fourth quarter.
Adjusted net income was $90.7 million or $1.34 per diluted share,
compared to adjusted net income of $83.8 million or $1.27 per
diluted share in the prior year fourth quarter.
Fiscal 2020 Overview
- Comparable store sales decreased 9.5%;
- Net sales were $5.090 billion compared to $6.466 billion in
fiscal 2019, reflecting an operating environment that included the
impact of operating during the wind-down of the seven-year-old
prior console cycle, a 12% decrease in the store base due to the
Company’s strategic de-densification efforts, which was partially
offset by recaptured sales via nearby stores and E-commerce, and a
significant reduction in global store operating days as a result of
temporary store closures in response to the COVID-19 pandemic at
various times throughout the year;
- Global E-Commerce sales (included in comparable stores sales)
increased 191% increase for the fiscal year and represented nearly
30% of total net sales;
- Gross margin was 24.7%, a decline of 480 basis points compared
to the prior year primarily driven by the expected mix shift toward
lower margin console sales in response to the launch of generation
9 consoles, increased freight and credit card fees associated with
the shift to E-Commerce sales and a broader promotional
stance;
- Selling, general and administrative expenses were $1.514
billion compared to $1.923 billion from the prior year, a reduction
of $408.5 million, or 21.2% from the prior fiscal
year;
- Income tax in fiscal 2020 was a benefit of $55.3 million driven
by a change in the tax status of certain foreign entities and the
impact of the CARES Act, including tax benefits associated with the
availability of a five-year carryback period for certain current
year tax losses, compared to income tax expense of $37.6 million in
the prior fiscal year;
- Net loss of ($215.3) million, or ($3.31) per diluted share
compared to net loss of ($470.9) million, or ($5.38) per diluted
share in the prior fiscal year. Adjusted net loss of ($138.8)
million or ($2.14) per diluted share compared to adjusted net
income of $19.1 million or $0.22 per diluted share in fiscal 2019,
and;
Executed on financial and operational
initiatives
- Delivered a $408.5 million, or a 21.2% reduction in SG&A
expense in fiscal 2020 compared to fiscal 2019, primarily driven by
continued cost optimization initiatives
- Strategically de-densified the Company’s store base by closing
a net 693 stores in fiscal 2020 while transferring sales to online
platforms and neighboring locations;
- Achieved 30% decrease in inventory at fiscal year-end, leading
to annualized inventory turns of 5.9x as compared to 4.4x in the
prior year, and a 10% decrease in accounts payable at fiscal
year-end as compared to fiscal 2019.
- Ended fiscal 2020 with $635 million of cash and restricted
cash;
- Reduced overall debt by $57 million, including a $125 million
voluntary redemption of the Company’s 6.75% senior notes due
2021;
- Completed exchange offer and consent solicitation for $216.4
million of unsecured notes;
- Completed five sale leaseback transactions related to office
buildings and the sale of a corporate travel asset, contributing
approximately $95.5 million towards total liquidity, and;
- Completed the wind down of operations in Denmark, Finland,
Norway and Sweden.
George Sherman, GameStop’s chief executive
officer, said, “I am proud of how our entire organization came
together in 2020 to adapt to the challenging pandemic environment,
effectively serve our customers’ demand for gaming and
entertainment products, and navigate through the year with strong
liquidity and a strengthened balance sheet. Our execution led to a
profitable fourth quarter that included a 6.5% comparable store
sales growth, a 175% increase in global E-Commerce sales and a
$92.6 million reduction in SG&A. The past year also saw us take
steps to accelerate our de-densification efforts and streamline our
store footprint, leverage our retail locations to provide same-day
delivery and curbside pickups, and continue to enhance our suite of
E-Commerce platforms. We also added important experience to our
board by appointing several new directors with backgrounds in
corporate finance, E-Commerce and technology and subsequently
established a strategy-focused committee to accelerate our
transformation.”
“We are off to a strong start in 2021 as
February comparable store sales increased 23%, led by continued
strength in global hardware sales. As we look ahead, we are excited
by the opportunities that are in front of us as we begin
prioritizing long-term digital and E-Commerce initiatives while
continuing to execute on our core business during this emerging
console cycle. Our emphasis in 2021 will be on improving our
E-Commerce and customer experience, increasing our speed of
delivery, providing superior customer service and expanding our
catalogue,” Sherman concluded.
Capital Structure and Liquidity
UpdateAs of January 30, 2021, the Company had $635 million
in cash and restricted cash compared to $513.5 million in cash and
restricted cash in the prior year. The Company’s outstanding
borrowings under its asset-based revolving credit facility were $25
million, which were subsequently repaid as of March 15, 2021.
As of January 30, 2021, the Company had $146.7
million of short-term debt and $216.0 million of long-term debt on
its balance sheet. During the fourth quarter, as previously
announced on November 10, 2020, the Company announced the voluntary
early redemption of $125 million in principal amount of its 6.75%
senior notes due 2021, on December 11, 2020. On March 15, 2021, the
Company fully redeemed the remaining $73.2 million of its 6.75%
senior notes due 2021, reflecting the Company’s strategy to
strengthen its balance sheet, improve its debt profile and optimize
its capital structure.
As of March 15, 2021, following the pay down of
outstanding borrowings under the Company’s asset-based revolving
credit facility and the redemption of its 6.75% senior notes due in
2021, the Company had $48.5 million of short-term debt and $216.0
million of long-term debt remaining on its balance sheet.
Corporate UpdateDuring the
fiscal 2020 fourth quarter, the Company added three new members –
Alan Attal, Ryan Cohen and Jim Grube – to its Board of Directors
(the “Board”). The Board subsequently formed a Strategic Planning
and Capital Allocation Committee (the “Committee”) to identify
initiatives that can further accelerate the Company’s
transformation. The Committee is comprised of Mr. Attal, Mr. Cohen,
and Kurt Wolf, with Mr. Cohen serving as Chairperson. Since the
Committee’s formation in late January 2020, the Company has
appointed a Chief Technology Officer and several other executives
with experience in E-Commerce, customer care and technology. In
March 2021, the Company appointed Jenna Owens as its Chief
Operating Officer. Ms. Owens has spent the majority of the past
decade in executive roles at Amazon and Google.
The Company is continuing to actively pursue
senior talent with E-Commerce, retail and technology experience in
order to transform the business over the long-term. In the
near-term, the Company is continuing to position its
brick-and-mortar footprint and digital assets to capitalize on the
emerging console cycle and additional gaming opportunities.
Starting with the first quarter of fiscal 2021,
the Company intends to modify its method of communicating its
quarterly financial results. These communications will include
a press release with the required disclosures and will be
accompanied by a presentation to include detailed supplemental
financial disclosures, financial statements and other operational
highlights, accessible via the Company’s Investor Relations home
page at http://investor.GameStop.com/.
2021 Strategic Initiatives
GameStop is focused on transforming into a customer-obsessed
technology company that delights gamers. The Board and management
are taking the below steps in fiscal year 2021:
- Investing in technology capabilities, including by in-sourcing
talent and revamping systems, and evaluating next-generation
assets;
- Building a superior customer experience;
- Expanding product offerings;
- Modernizing U.S. fulfillment operations to improve speed of
delivery and service;
- Establishing a U.S.-based customer care operation, and;
- Leveraging the Company’s digital assets, including Game
Informer and PowerUp Rewards, to increase market share within the
growing online gaming community.
2021 Outlook During 2021, the
Company will focus on its transformation while also capitalizing on
the emerging console cycle and navigating the COVID-19 pandemic.
The Company is continuing to suspend guidance at this time.
Further, as a result of prolonged pandemic related store closures
which began in March 2020, which will impact the calculation of
comparable store sales this year, the Company does not currently
intend to report this metric in fiscal 2021. The Company believes
total net sales is the more appropriate metric to evaluate the
performance of the business at this time. As the Company continues
to reposition during 2021, it will continue to evaluate the metrics
that it believes will most effectively inform investors of the
Company’s performance, development and outlook.
Webcast and Conference Call
InformationA webcast with GameStop management is scheduled
for March 23, 2021, at 5:00 p.m. ET to discuss the Company’s
financial results and can be accessed on GameStop’s investor
relations home page at http://investor.GameStop.com/. The
phone number for the call is 877-451-6152 and the confirmation code
is 13715567. This webcast will be archived for two
months on GameStop’s corporate website.
About GameStopGameStop, a
Fortune 500 company headquartered in Grapevine, Texas, is a leading
specialty retailer offering games and entertainment products
through its E-Commerce properties and thousands of stores. Visit
www.GameStop.com to explore our products and offerings. Follow
@GameStop and @GameStopCorp on Twitter and find us 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 SG&A, adjusted operating income
(loss), adjusted net income (loss), adjusted diluted earnings
(loss) per share, adjusted EBITDA and free cash flow. We believe
these non-GAAP financial measures provide useful information to
investors in evaluating our core operating performance. Adjusted
selling, general and administrative expenses (“Adjusted SG&A”),
adjusted operating income (loss), adjusted net income (loss) and
adjusted earnings (loss) 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
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. A complete
definition of comparable store sales can be found in the Company’s
Form 10-K for the fiscal year ended January 30, 2021, being filed
on the date of this press release.
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,
strategic and transformation initiatives, future operations,
margins, profitability, comparable store growth, capital
expenditures, liquidity, capital resources, expansion of technology
expertise, and other financial and operating information, including
expectations as to future operating profit improvement. Such
statements include without limitation those about the Company’s
expectations for fiscal 2021, future financial and operating
results, projections and other statements that are not historical
facts. Forward-looking statements are subject to significant risks
and uncertainties and actual developments, business decisions,
outcomes and results may differ materially from those reflected or
described in the forward-looking statements. The following factors,
among others, could cause actual developments, business decisions,
outcomes and results to differ materially from those reflected or
described in the forward-looking statements: macroeconomic
pressures, including the effects of the COVID-19 pandemic on
consumer spending and the Company’s ability to keep stores open;
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 amounts devoted to strategic
investments, including in E-Commerce capabilities and other
business transformation initiatives, and failure to achieve
anticipated profitability increases and benefits from such
initiatives within the expected time-frames or at all; 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; decrease in popularity of
certain types of video games; the Company’s ability to react to
trends in pop culture with regard to its sales of collectibles and
dependence on licensed products for a substantial portion of such
sales; the competitive nature of the Company’s industry, including
competition from mass retailers, E-Commerce businesses, and
traditional store-based retailers; the ability and willingness of
the Company’s vendors to provide marketing and merchandise support
at historical or anticipated levels; the Company’s ability to
attract and retain executive officers, including a new chief
financial officer, and other key personnel; the Company’s ability
to obtain favorable terms from its current and future suppliers and
vendors, including those engaged as part of the Company’s shift to
E-Commerce sales; the international nature of the Company’s
business; foreign currency fluctuations; changes in the Company’s
global tax rate; the impact of international crises and trade
restrictions and tariffs on the delivery of the Company’s products;
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, terminate or enter into
new leases on favorable terms; 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 maintain security of its customer,
employee or company information; potential harm to the Company’s
reputation, including from cybersecurity breaches; the Company’s
ability to maintain effective control over financial reporting;
restrictions on the Company’s ability to purchase and sell
pre-owned video games; 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 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 January 30, 2021 being filed
on the date of this press release and 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 press release speak only as of the
date of this press 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 endedJanuary 30,
2021 |
|
13 weeks endedFebruary 1,
2020 |
Net sales |
|
$ |
2,122.1 |
|
|
|
$ |
2,194.1 |
|
|
Cost of sales |
|
1,673.5 |
|
|
|
1,596.8 |
|
|
Gross profit |
|
448.6 |
|
|
|
597.3 |
|
|
Selling, general and
administrative expenses |
|
419.1 |
|
|
|
511.7 |
|
|
Goodwill and asset
impairments |
|
10.7 |
|
|
|
10.4 |
|
|
Operating earnings |
|
18.8 |
|
|
|
75.2 |
|
|
Interest expense, net |
|
8.2 |
|
|
|
6.5 |
|
|
Earnings from continuing operations before income taxes |
|
10.6 |
|
|
|
68.7 |
|
|
Income tax (benefit)
expense |
|
(69.7 |
) |
|
|
43.8 |
|
|
Net income from continuing
operations |
|
80.3 |
|
|
|
24.9 |
|
|
Income from discontinued
operations, net of tax |
|
0.2 |
|
|
|
(3.9 |
) |
|
Net income |
|
$ |
80.5 |
|
|
|
$ |
21.0 |
|
|
|
|
|
|
|
Basic earnings (loss) per
share: |
|
|
|
|
Continuing operations |
|
$ |
1.23 |
|
|
|
$ |
0.38 |
|
|
Discontinued operations |
|
— |
|
|
|
(0.06 |
) |
|
Basic earnings (loss) per
share |
|
$ |
1.23 |
|
|
|
$ |
0.32 |
|
|
|
|
|
|
|
Diluted earnings (loss) per
share: |
|
|
|
|
Continuing operations |
|
$ |
1.18 |
|
|
|
$ |
0.38 |
|
|
Discontinued operations |
|
— |
|
|
|
(0.06 |
) |
|
Diluted earnings (loss) per
share |
|
$ |
1.19 |
|
|
|
$ |
0.32 |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
|
65.2 |
|
|
|
65.5 |
|
|
Diluted |
|
67.8 |
|
|
|
65.7 |
|
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
Net sales |
|
100.0 |
|
% |
|
100.0 |
|
% |
Cost of sales |
|
78.9 |
|
% |
|
72.8 |
|
% |
Gross profit |
|
21.1 |
|
% |
|
27.2 |
|
% |
Selling, general and
administrative expenses |
|
19.7 |
|
% |
|
23.3 |
|
% |
Goodwill and asset
impairments |
|
0.5 |
|
% |
|
0.5 |
|
% |
(Gain) on sale of assets |
|
— |
|
% |
|
— |
|
% |
Operating earnings |
|
0.9 |
|
% |
|
3.4 |
|
% |
Interest expense, net |
|
0.4 |
|
% |
|
0.3 |
|
% |
Earnings from continuing operations before income taxes |
|
0.5 |
|
% |
|
3.1 |
|
% |
Income tax (benefit)
expense |
|
(3.3 |
) |
% |
|
2.0 |
|
% |
Net income from continuing
operations |
|
3.8 |
|
% |
|
1.1 |
|
% |
Income from discontinued
operations, net of tax |
|
— |
|
% |
|
(0.1 |
) |
% |
Net income |
|
3.8 |
|
% |
|
1.0 |
|
% |
|
|
|
|
|
|
|
|
|
GameStop Corp.Condensed
Consolidated Statements of Operations(in millions,
except per share data)(unaudited)
|
|
52 weeks endedJanuary 30, 2021 |
|
52 weeks endedFebruary 1, 2020 |
Net sales |
|
$ |
5,089.8 |
|
|
|
$ |
6,466.0 |
|
|
Cost of sales |
|
3,830.3 |
|
|
|
4,557.3 |
|
|
Gross profit |
|
1,259.5 |
|
|
|
1,908.7 |
|
|
Selling, general and
administrative expenses |
|
1,514.2 |
|
|
|
1,922.7 |
|
|
Goodwill and asset
impairments |
|
15.5 |
|
|
|
385.6 |
|
|
Gain on sale of assets |
|
(32.4 |
) |
|
|
— |
|
|
Operating loss |
|
(237.8 |
) |
|
|
(399.6 |
) |
|
Interest expense, net |
|
32.1 |
|
|
|
27.2 |
|
|
Loss from continuing operations before income taxes |
|
(269.9 |
) |
|
|
(426.8 |
) |
|
Income tax (benefit)
expense |
|
(55.3 |
) |
|
|
37.6 |
|
|
Net loss from continuing
operations |
|
(214.6 |
) |
|
|
(464.4 |
) |
|
Loss from discontinued
operations, net of tax |
|
(0.7 |
) |
|
|
(6.5 |
) |
|
Net loss |
|
$ |
(215.3 |
) |
|
|
$ |
(470.9 |
) |
|
|
|
|
|
|
Basic (loss) per share: |
|
|
|
|
Continuing operations |
|
$ |
(3.30 |
) |
|
|
$ |
(5.31 |
) |
|
Discontinued operations |
|
(0.01 |
) |
|
|
(0.08 |
) |
|
Basic loss per share |
|
$ |
(3.31 |
) |
|
|
$ |
(5.38 |
) |
|
|
|
|
|
|
Diluted (loss) per share: |
|
|
|
|
Continuing operations |
|
$ |
(3.30 |
) |
|
|
$ |
(5.31 |
) |
|
Discontinued operations |
|
(0.01 |
) |
|
|
(0.08 |
) |
|
Diluted loss per share |
|
$ |
(3.31 |
) |
|
|
$ |
(5.38 |
) |
|
|
|
|
|
|
Dividends per common
share |
|
$ |
— |
|
|
|
$ |
0.38 |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
|
65.0 |
|
|
|
87.5 |
|
|
Diluted |
|
65.0 |
|
|
|
87.5 |
|
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
|
% |
|
100.0 |
|
% |
Cost of sales |
|
75.3 |
|
% |
|
70.5 |
|
% |
Gross profit |
|
24.7 |
|
% |
|
29.5 |
|
% |
Selling, general and
administrative expenses |
|
29.7 |
|
% |
|
29.8 |
|
% |
Goodwill and asset
impairments |
|
0.3 |
|
% |
|
5.9 |
|
% |
Gain (loss) on sale of
assets |
|
(0.6 |
) |
% |
|
— |
|
% |
Operating loss |
|
(4.7 |
) |
% |
|
(6.2 |
) |
% |
Interest expense, net |
|
0.6 |
|
% |
|
0.4 |
|
% |
Loss from continuing operations before income taxes |
|
(5.3 |
) |
% |
|
(6.6 |
) |
% |
Income tax (benefit)
expense |
|
(1.1 |
) |
% |
|
0.6 |
|
% |
Net loss from continuing
operations |
|
(4.2 |
) |
% |
|
(7.2 |
) |
% |
Loss from discontinued
operations, net of tax |
|
— |
|
% |
|
(0.1 |
) |
% |
Net loss |
|
(4.2 |
) |
% |
|
(7.3 |
) |
% |
|
|
|
|
|
|
|
|
|
GameStop Corp.Condensed
Consolidated Balance Sheets(in
millions)(unaudited)
|
|
January 30,2021 |
|
February 1,2020 |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
508.5 |
|
|
$ |
499.4 |
|
Restricted cash |
|
110.0 |
|
|
0.3 |
|
Receivables, net |
|
105.3 |
|
|
141.9 |
|
Merchandise inventories |
|
602.5 |
|
|
859.7 |
|
Prepaid expenses and other current assets |
|
224.9 |
|
|
120.6 |
|
Assets held-for-sale |
|
— |
|
|
11.8 |
|
Total current assets |
|
1,551.2 |
|
|
1,633.7 |
|
Property and equipment,
net |
|
201.2 |
|
|
275.9 |
|
Operating lease right-of-use
assets |
|
662.1 |
|
|
767.0 |
|
Deferred income taxes |
|
— |
|
|
83.0 |
|
Long-term restricted cash |
|
16.5 |
|
|
13.8 |
|
Other noncurrent assets |
|
41.6 |
|
|
46.3 |
|
Total assets |
|
$ |
2,472.6 |
|
|
$ |
2,819.7 |
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
341.8 |
|
|
$ |
380.8 |
|
Accrued liabilities and other current liabilities |
|
626.8 |
|
|
617.5 |
|
Current portion of operating lease liabilities |
|
227.4 |
|
|
239.4 |
|
Short-term debt, including current portion of long-term debt,
net |
|
121.7 |
|
|
— |
|
Borrowings under revolving line of credit |
|
25.0 |
|
|
— |
|
Total current liabilities |
|
1,342.7 |
|
|
1,237.7 |
|
Long-term debt, net |
|
216.0 |
|
|
419.8 |
|
Operating lease
liabilities |
|
456.7 |
|
|
529.3 |
|
Other long-term
liabilities |
|
20.5 |
|
|
21.4 |
|
Total liabilities |
|
2,035.9 |
|
|
2,208.2 |
|
Stockholders’ equity |
|
436.7 |
|
|
611.5 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,472.6 |
|
|
$ |
2,819.7 |
|
|
|
|
|
|
|
|
|
|
GameStop Corp.Condensed
Consolidated Statements of Cash Flows(in
millions)(unaudited)
|
|
13 weeks endedJanuary 30,
2021 |
|
13 weeks endedFebruary 1,
2020 |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
80.5 |
|
|
|
$ |
21.0 |
|
|
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales) |
|
19.6 |
|
|
|
26.1 |
|
|
Goodwill and asset impairments |
|
10.7 |
|
|
|
10.4 |
|
|
Stock-based compensation expense |
|
1.8 |
|
|
|
0.8 |
|
|
Deferred income taxes |
|
34.9 |
|
|
|
73.2 |
|
|
Loss on disposal of property and equipment, net |
|
3.3 |
|
|
|
— |
|
|
Loss on divestiture |
|
— |
|
|
|
7.8 |
|
|
Other |
|
(1.7 |
) |
|
|
1.0 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
(26.0 |
) |
|
|
(4.2 |
) |
|
Merchandise inventories |
|
270.8 |
|
|
|
422.7 |
|
|
Prepaid expenses and other current assets |
|
11.3 |
|
|
|
14.3 |
|
|
Prepaid income taxes and income taxes payable |
|
(98.7 |
) |
|
|
(31.7 |
) |
|
Accounts payable and accrued liabilities |
|
(157.5 |
) |
|
|
(304.4 |
) |
|
Operating lease right-of-use assets and liabilities |
|
17.9 |
|
|
|
3.4 |
|
|
Changes in other long-term liabilities |
|
(2.1 |
) |
|
|
(0.1 |
) |
|
Net cash flows used in operating activities |
|
164.8 |
|
|
|
240.3 |
|
|
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and equipment |
|
(27.4 |
) |
|
|
(17.1 |
) |
|
Proceeds from sale of property and equipment |
|
— |
|
|
|
5.2 |
|
|
Proceeds from company-owned life insurance |
|
— |
|
|
|
12.0 |
|
|
Proceeds from divestitures |
|
— |
|
|
|
(5.2 |
) |
|
Other |
|
1.0 |
|
|
|
1.1 |
|
|
Net cash flows provided by (used in) investing activities |
|
(26.4 |
) |
|
|
(4.0 |
) |
|
Cash flows from financing
activities: |
|
|
|
|
Repurchase of common shares |
|
— |
|
|
|
(21.8 |
) |
|
Repayments of senior notes |
|
(125.0 |
) |
|
|
— |
|
|
Settlement of stock-based awards |
|
4.1 |
|
|
|
(0.2 |
) |
|
Net cash flows provided by (used in) financing activities |
|
(120.9 |
) |
|
|
(22.0 |
) |
|
Exchange rate effect on cash, cash equivalents and restricted
cash |
|
14.9 |
|
|
|
(5.2 |
) |
|
Increase in cash, cash equivalents and restricted cash |
|
32.4 |
|
|
|
209.1 |
|
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
602.6 |
|
|
|
304.4 |
|
|
Cash,
cash equivalents and restricted cash at end of period |
|
$ |
635.0 |
|
|
|
$ |
513.5 |
|
|
|
|
|
|
|
GameStop Corp.Condensed
Consolidated Statements of Cash Flows(in
millions)(unaudited)
|
|
52 weeks ended January 30, 2021 |
|
52 weeks ended February 1, 2020 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(215.3 |
) |
|
|
$ |
(470.9 |
) |
|
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales) |
|
80.7 |
|
|
|
96.2 |
|
|
Goodwill and asset impairments |
|
15.5 |
|
|
|
385.6 |
|
|
Stock-based compensation expense |
|
7.9 |
|
|
|
8.9 |
|
|
Deferred income taxes |
|
80.3 |
|
|
|
61.4 |
|
|
Loss on disposal of property and equipment, net |
|
(27.3 |
) |
|
|
1.9 |
|
|
Loss on divestiture |
|
— |
|
|
|
9.1 |
|
|
Other |
|
0.9 |
|
|
|
4.1 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
39.8 |
|
|
|
(10.9 |
) |
|
Merchandise inventories |
|
282.4 |
|
|
|
361.1 |
|
|
Prepaid expenses and other current assets |
|
8.4 |
|
|
|
3.6 |
|
|
Prepaid income taxes and income taxes payable |
|
(87.0 |
) |
|
|
(75.9 |
) |
|
Accounts payable and accrued liabilities |
|
(78.6 |
) |
|
|
(792.8 |
) |
|
Operating lease right-of-use assets and liabilities |
|
19.0 |
|
|
|
4.1 |
|
|
Changes in other long-term liabilities |
|
(3.0 |
) |
|
|
— |
|
|
Net cash flows (used in) provided by operating activities |
|
123.7 |
|
|
|
(414.5 |
) |
|
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and equipment |
|
(60.0 |
) |
|
|
(78.5 |
) |
|
Proceeds from sale of property and equipment |
|
95.5 |
|
|
|
— |
|
|
Proceeds from divestiture |
|
— |
|
|
|
5.2 |
|
|
Proceeds from company-owned life insurance |
|
— |
|
|
|
12.0 |
|
|
Other |
|
1.4 |
|
|
|
0.4 |
|
|
Net cash flows (used in) provided by investing activities |
|
36.9 |
|
|
|
(60.9 |
) |
|
Cash flows from financing
activities: |
|
|
|
|
Repayments of senior notes |
|
(130.3 |
) |
|
|
(404.5 |
) |
|
Repurchase of common shares |
|
— |
|
|
|
(198.7 |
) |
|
Proceeds from French term loans |
|
47.1 |
|
|
|
— |
|
|
Dividends paid |
|
(0.3 |
) |
|
|
(40.5 |
) |
|
Borrowings from the revolver |
|
150.0 |
|
|
|
— |
|
|
Repayments of revolver borrowings |
|
(125.0 |
) |
|
|
— |
|
|
Tax withholdings on
share-based awards |
|
3.1 |
|
|
|
(1.0 |
) |
|
Net cash flows used in financing activities |
|
(55.4 |
) |
|
|
(644.7 |
) |
|
Exchange rate effect on cash, cash equivalents and restricted
cash |
|
16.3 |
|
|
|
(6.9 |
) |
|
(Decrease) increase in cash, cash equivalents and restricted
cash |
|
121.5 |
|
|
|
(1,127.0 |
) |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
513.5 |
|
|
|
1,640.5 |
|
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
635.0 |
|
|
|
$ |
513.5 |
|
|
|
|
|
|
|
GameStop Corp.Schedule
ISales
Mix(unaudited)
|
|
13 Weeks EndedJanuary 30,
2021 |
|
13 Weeks EndedFebruary 1,
2020 |
Net Sales (in millions): |
|
Net Sales |
|
Percentof Total |
|
Net Sales |
|
Percentof Total |
|
|
|
|
|
|
|
|
|
Hardware and
accessories(1) |
|
1,162.7 |
|
|
54.8 |
% |
|
964.8 |
|
|
44.0 |
% |
Software(2) |
|
731.2 |
|
|
34.4 |
% |
|
984.3 |
|
|
44.8 |
% |
Collectibles |
|
228.2 |
|
|
10.8 |
% |
|
245.0 |
|
|
11.2 |
% |
Total |
|
$ |
2,122.1 |
|
|
100.0 |
% |
|
$ |
2,194.1 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Weeks EndedJanuary 30,
2021 |
|
52 Weeks EndedFebruary 1,
2020 |
Net Sales (in millions): |
|
Net Sales |
|
Percentof Total |
|
Net Sales |
|
Percentof Total |
|
|
|
|
|
|
|
|
|
Hardware and
accessories(1) |
|
2,530.8 |
|
|
49.7 |
% |
|
2,722.2 |
|
|
42.1 |
% |
Software(2) |
|
1,979.1 |
|
|
38.9 |
% |
|
3,006.3 |
|
|
46.5 |
% |
Collectibles |
|
579.9 |
|
|
11.4 |
% |
|
737.5 |
|
|
11.4 |
% |
Total |
|
$ |
5,089.8 |
|
|
100.0 |
% |
|
$ |
6,466.0 |
|
|
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)(unaudited)
Non-GAAP results
The following table reconciles the Company's
selling, general and administrative expenses ("SG&A"),
operating earnings, net income (loss)and earnings (loss) per share
as presented in its consolidated statements of operations and
prepared in accordance with United States generally accepted
accounting principles ("GAAP") to its adjusted SG&A, adjusted
operating income (loss), adjusted net income (loss) and adjusted
diluted 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 tax adjustments below for
the 13 and 52 weeks ended January 30, 2021 respectively,
include provisions for deferred tax valuation allowances and the
tax effects of non-GAAP adjustments. The reconciliations below are
from continuing operations only.
|
|
13 Weeks EndedJanuary 30,
2021 |
|
13 Weeks EndedFebruary 1,
2020 |
|
52 Weeks EndedJanuary 30,
2021 |
|
52 Weeks EndedFebruary 1,
2020 |
|
|
|
|
|
|
|
|
|
Adjusted
SG&A |
|
|
|
|
|
|
|
|
SG&A |
|
$ |
419.1 |
|
|
$ |
511.7 |
|
|
|
$ |
1,514.2 |
|
|
|
$ |
1,922.7 |
|
|
Transformation costs |
|
0.4 |
|
|
(10.8 |
) |
|
|
(1.6 |
) |
|
|
(37.9 |
) |
|
Significant transactions (1) |
|
— |
|
|
— |
|
|
|
(7.5 |
) |
|
|
— |
|
|
Divestitures, severance and other |
|
0.2 |
|
|
(12.8 |
) |
|
|
(7.6 |
) |
|
|
(38.4 |
) |
|
Adjusted SG&A |
|
$ |
419.7 |
|
|
$ |
488.1 |
|
|
|
$ |
1,497.5 |
|
|
|
$ |
1,846.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks EndedJanuary 30,
2021 |
|
13 Weeks EndedFebruary 1,
2020 |
|
52 Weeks EndedJanuary 30,
2021 |
|
52 Weeks EndedFebruary 1,
2020 |
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income (Loss) |
|
|
|
|
|
|
|
|
Operating earnings (loss) |
|
$ |
18.8 |
|
|
|
$ |
75.2 |
|
|
$ |
(237.8 |
) |
|
|
$ |
(399.6 |
) |
|
Transformation costs |
|
(0.4 |
) |
|
|
10.8 |
|
|
1.6 |
|
|
|
37.9 |
|
|
Goodwill and asset impairment |
|
10.7 |
|
|
|
10.4 |
|
|
15.5 |
|
|
|
385.6 |
|
|
Significant transactions (2) |
|
— |
|
|
|
— |
|
|
(24.9 |
) |
|
|
— |
|
|
Divestitures, severance and other |
|
(0.2 |
) |
|
|
12.8 |
|
|
7.6 |
|
|
|
38.4 |
|
|
Adjusted operating income |
|
$ |
28.9 |
|
|
|
$ |
109.2 |
|
|
$ |
(238.0 |
) |
|
|
$ |
62.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks EndedJanuary 30,
2021 |
|
13 Weeks EndedFebruary 1,
2020 |
|
52 Weeks EndedJanuary 30,
2021 |
|
52 Weeks EndedFebruary 1,
2020 |
Adjusted Net Income
(Loss) |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
80.5 |
|
|
|
$ |
21.0 |
|
|
|
$ |
(215.3 |
) |
|
|
$ |
(470.9 |
) |
|
(Income) loss from discontinued operations |
|
(0.2 |
) |
|
|
3.9 |
|
|
|
0.7 |
|
|
|
6.5 |
|
|
Net income (loss) from
continuing operations |
|
80.3 |
|
|
|
24.9 |
|
|
|
(214.6 |
) |
|
|
(464.4 |
) |
|
Transformation costs |
|
(0.4 |
) |
|
|
10.8 |
|
|
|
1.6 |
|
|
|
37.9 |
|
|
Goodwill and asset impairment |
|
10.7 |
|
|
|
10.4 |
|
|
|
15.5 |
|
|
|
385.6 |
|
|
Significant transactions (2) |
|
— |
|
|
|
— |
|
|
|
(24.9 |
) |
|
|
— |
|
|
Divestitures, severance, and other |
|
(0.2 |
) |
|
|
12.8 |
|
|
|
7.6 |
|
|
|
38.4 |
|
|
Tax effect of non-GAAP adjustments |
|
0.3 |
|
|
|
(6.8 |
) |
|
|
23.0 |
|
|
|
(30.9 |
) |
|
Tax valuation allowance |
|
— |
|
|
|
31.7 |
|
|
|
53.0 |
|
|
|
52.5 |
|
|
Adjusted net income |
|
$ |
90.7 |
|
|
|
$ |
83.8 |
|
|
|
$ |
(138.8 |
) |
|
|
$ |
19.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
(Loss) Per Share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.39 |
|
|
|
$ |
1.28 |
|
|
|
$ |
(2.14 |
) |
|
|
$ |
0.22 |
|
|
Diluted |
|
$ |
1.34 |
|
|
|
$ |
1.27 |
|
|
|
$ |
(2.14 |
) |
|
|
$ |
0.22 |
|
|
|
|
|
|
|
|
|
|
|
Dividend per common share |
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in
adjusted calculation |
|
|
|
|
|
|
|
|
Basic |
|
65.2 |
|
|
|
65.5 |
|
|
|
65.0 |
|
|
|
87.5 |
|
|
Diluted |
|
67.8 |
|
|
|
65.7 |
|
|
|
65.0 |
|
|
|
87.6 |
|
|
(1) |
Includes transaction costs associated with our debt exchange. |
(2) |
Includes the gain on sale of assets relating to sale-leaseback
transactions and transaction costs associated with our debt
exchange. |
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
52 Weeks Ended |
|
52 Weeks Ended |
|
|
January 30, 2021 |
|
February 1, 2020 |
|
January 30, 2021 |
|
February 1, 2020 |
Reconciliation of
Adjusted EBITDA to Net Income (Loss) |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
80.5 |
|
|
|
$ |
21.0 |
|
|
$ |
(215.3 |
) |
|
|
$ |
(470.9 |
) |
|
Income (loss) from
discontinued operations, net of tax |
|
(0.2 |
) |
|
|
3.9 |
|
|
0.7 |
|
|
|
6.5 |
|
|
Income (loss) from continuing
operations |
|
$ |
80.3 |
|
|
|
$ |
24.9 |
|
|
$ |
(214.6 |
) |
|
|
$ |
(464.4 |
) |
|
Interest expense, net |
|
8.2 |
|
|
|
6.5 |
|
|
32.1 |
|
|
|
27.2 |
|
|
Depreciation and amortization |
|
19.6 |
|
|
|
26.1 |
|
|
80.7 |
|
|
|
96.2 |
|
|
Income tax (benefit) expense |
|
(69.7 |
) |
|
|
43.8 |
|
|
(55.3 |
) |
|
|
37.6 |
|
|
EBITDA |
|
$ |
38.4 |
|
|
|
$ |
101.3 |
|
|
$ |
(157.1 |
) |
|
|
$ |
(303.4 |
) |
|
Stock-based compensation |
|
1.8 |
|
|
|
0.9 |
|
|
7.9 |
|
|
|
8.3 |
|
|
Transformation costs |
|
(0.4 |
) |
|
|
10.8 |
|
|
1.6 |
|
|
|
37.9 |
|
|
Goodwill and asset impairments |
|
10.7 |
|
|
|
10.4 |
|
|
15.5 |
|
|
|
385.6 |
|
|
Significant transactions(1) |
|
— |
|
|
|
— |
|
|
(24.9 |
) |
|
|
— |
|
|
Divestitures, severance and other |
|
(0.2 |
) |
|
|
12.8 |
|
|
7.6 |
|
|
|
38.4 |
|
|
Adjusted EBITDA |
|
$ |
50.3 |
|
|
|
$ |
136.2 |
|
|
$ |
(149.4 |
) |
|
|
$ |
166.8 |
|
|
|
|
|
|
|
|
|
|
|
(1) Includes the
gain on sale of assets relating to sale-leaseback transactions and
transaction costs associated with our debt exchange. |
GameStop Corp.(in
millions)(unaudited)
Non-GAAP results
The 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 and adjusted free cash
flow.
|
13 Weeks Ended |
|
13 Weeks Ended |
|
52 Weeks Ended |
|
52 Weeks Ended |
|
January 30, 2021 |
|
February 1, 2020 |
|
January 30, 2021 |
|
February 1, 2020 |
Net cash flows used in operating activities |
$ |
164.8 |
|
|
|
$ |
240.3 |
|
|
|
$ |
123.7 |
|
|
|
$ |
(414.5 |
) |
|
Purchase of property and equipment |
(27.4 |
) |
|
|
(17.1 |
) |
|
|
(60.0 |
) |
|
|
(78.5 |
) |
|
Free cash flow |
$ |
137.4 |
|
|
|
$ |
223.2 |
|
|
|
$ |
63.7 |
|
|
|
$ |
(493.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures and Other Metrics
Adjusted EBITDA, adjusted selling, general and
administrative expense, adjusted operating income and adjusted net
income are supplemental financial measures of the Company’s
performance that are not required by, or presented in accordance
with, GAAP. We believe that the presentation of these non-GAAP
financial measures 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, adjusted selling, general and administrative expense,
adjusted operating income and adjusted net income as analytical
tools 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, adjusted selling, general
and administrative expense, adjusted operating income and adjusted
net income 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, adjusted selling, general and administrative
expense, adjusted operating income and adjusted net income 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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