GRAPEVINE, Texas, Sept. 06, 2023 (GLOBE NEWSWIRE) -- GameStop Corp. (: GME) (“GameStop” or the “Company”) today released financial results for the second quarter ended July 29, 2023. The Company’s condensed and consolidated financial statements, including GAAP and non-GAAP results, are below. The Company’s Form 10-Q and supplemental information can be found at https://investor.gamestop.com.
SECOND QUARTER OVERVIEW
- Net sales were $1.164 billion for the period, compared to $1.136 billion in the prior year's second quarter.
- Selling, general and administrative (“SG&A") expenses were $322.5 million, or 27.7% of net sales for the period, compared to $387.5 million, or 34.1% of net sales, in the prior year's second quarter.
- Net loss was $2.8 million for the period, compared to a net loss of $108.7 million for the prior year’s second quarter.
- Transition costs related to European restructuring efforts were $4.3 million for the second quarter.
- Cash, cash equivalents and marketable securities were $1.195 billion at the close of the quarter.
- Long-term debt remains limited to one low-interest, unsecured term loan associated with the French government’s response to COVID-19.
The Company will not be holding a conference call today. Additional information can be found in the Company’s Form 10-Q.
NON-GAAP MEASURES AND OTHER METRICS
As a supplement to the Company’s 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 expense, adjusted operating income (loss), adjusted net income (loss), adjusted earnings (loss) per share, adjusted EBITDA and free cash flow. The Company believes these non-GAAP financial measures provide useful information to investors in evaluating the Company’s core operating performance. Adjusted SG&A expense, adjusted operating income (loss), adjusted net income (loss), adjusted earnings (loss) per share and adjusted EBITDA exclude the effect of items such as certain transformation costs, asset impairments, severance, as well as divestiture costs. Free cash flow excludes capital expenditures otherwise included in net cash flows from (used in) operating activities. The Company’s 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.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS - 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, strategic and transformation initiatives, future operations, margins, profitability, sales 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 2023, 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: economic, social, and political conditions in the markets in which we operate; the competitive nature of the Company’s industry; 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; interruptions to the Company’s supply chain or the supply chain of our suppliers; the Company’s dependence on sales during the holiday selling season; the Company’s ability to obtain favorable terms from its current and future suppliers and service providers; the Company’s ability to anticipate, identify and react to trends in pop culture with regard to its sales of collectibles; the Company’s ability to maintain strong retail and ecommerce experiences for its customers; the Company’s ability to keep pace with changing industry technology and consumer preferences; the Company’s ability to manage its profitability and cost reduction initiatives; turnover in senior management or the Company’s ability to attract and retain qualified personnel; potential damage to the Company’s reputation or customers' perception of the Company; risks associated with new digital asset products and services; the Company’s ability to maintain the security or privacy of its customer, associate or Company information; occurrence of weather events, natural disasters, public health crises and other unexpected events; potential failure or inadequacy of the Company's computerized systems; the ability of the Company’s third party delivery services to deliver products to the Company’s retail locations, fulfillment centers and consumers and changes in the terms the Company has with such service providers; the ability and willingness of the Company’s vendors to provide marketing and merchandising support at historical or anticipated levels; restrictions on the Company’s ability to purchase and sell pre-owned products; the Company’s ability to renew or enter into new leases on favorable terms; the potential monetary losses, user disputes, reputational harm and regulatory scrutiny from any hacking, social engineering or other cyber attacks in connection with digital assets; the potential failure or inadequacy of the Company’s or its third party partners’ systems or blockchain networks related to the Company’s digital asset products and services; the unique risks and challenges related to content moderation and control from peer-to-peer NFT marketplaces; unfavorable changes in the Company’s global tax rate; legislative actions; the Company’s ability to comply with federal, state, local and international laws and regulations and statutes; the evolution of government regulation related to the Company’s business initiatives; potential future litigation and other legal proceedings; potential legal, regulatory and other actions arising from the Company’s digital asset products and services; potential investigations or litigation arising from the Company’s digital asset investments, products or services; potential exposure to litigation arising from violations of law by third parties using the Company’s digital asset products or services; potential unfavorable development regarding treatment of digital assets under U.S. and foreign tax laws; the Company’s ability to comply with anti-money laundering and sanctions laws in connection with its digital asset products and services; volatility in the Company’s stock price, including volatility due to potential short squeezes; continued high degrees of media coverage by third parties; the availability and future sales of substantial amounts of the Company’s Class A common stock; fluctuations in the Company’s results of operations from quarter to quarter; the restrictions contained in the agreement governing the Company’s revolving credit facility; the Company’s ability to generate sufficient cash flow to fund its operations; the Company’s ability to incur additional debt; the Company’s ability to implement a new ERP system; the Company’s ability to maintain effective control over financial reporting; and the effects of recent developments on the price of digital assets and reputation of the digital asset industry. 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 most recent Annual Report on Form 10-K filed with the SEC on March 28, 2023, in GameStop’s Quarterly Reports on Form 10-Q filed with the SEC on June 7, 2023 and the date hereof, and other filings made from time to time with the SEC and available at www.sec.gov or on the Company’s investor relations website (https://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.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
| 13 Weeks ended July 29, 2023 | 13 Weeks ended July 30, 2022 | |||||||
| Net sales | $ | 1,163.8 | $ | 1,136.0 | ||||
| Cost of sales | 857.9 | 853.8 | ||||||
| Gross profit | 305.9 | 282.2 | ||||||
| Selling, general and administrative expenses | 322.5 | 387.5 | ||||||
| Asset Impairments | — | 2.5 | ||||||
| Operating loss | (16.6 | ) | (107.8 | ) | ||||
| Interest income, net | (11.6 | ) | (0.3 | ) | ||||
| Other income, net | (2.0 | ) | — | |||||
| Loss before income taxes | (3.0 | ) | (107.5 | ) | ||||
| Income tax (benefit) expense | (0.2 | ) | 1.2 | |||||
| Net loss | $ | (2.8 | ) | $ | (108.7 | ) | ||
| Loss per share: | ||||||||
| Basic loss per share | $ | (0.01 | ) | $ | (0.36 | ) | ||
| Diluted loss per share | (0.01 | ) | (0.36 | ) | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 304.8 | 304.2 | ||||||
| Diluted | 304.8 | 304.2 | ||||||
| Percentage of Net Sales: | ||||||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 73.7 | 75.2 | ||||||
| Gross profit | 26.3 | 24.8 | ||||||
| Selling, general and administrative expenses | 27.7 | 34.1 | ||||||
| Asset Impairments | — | 0.2 | ||||||
| Operating loss | (1.4 | ) | (9.5 | ) | ||||
| Interest income, net | (1.0 | ) | — | |||||
| Other income, net | (0.2 | ) | — | |||||
| Loss before income taxes | (0.3 | ) | (9.5 | ) | ||||
| Income tax (benefit) expense | — | 0.1 | ||||||
| Net loss | (0.2 | )% | (9.6 | )% | ||||
GameStop Corp.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
| 26 Weeks ended July 29, 2023 | 26 Weeks ended July 30, 2022 | |||||||
| Net sales | $ | 2,400.9 | $ | 2,514.4 | ||||
| Cost of sales | 1,807.7 | 1,933.7 | ||||||
| Gross profit | 593.2 | 580.7 | ||||||
| Selling, general and administrative expenses | 668.2 | 839.7 | ||||||
| Asset Impairments | — | 2.5 | ||||||
| Operating loss | (75.0 | ) | (261.5 | ) | ||||
| Interest (income) expense, net | (21.3 | ) | 0.4 | |||||
| Other income, net | (0.1 | ) | — | |||||
| Loss before income taxes | (53.6 | ) | (261.9 | ) | ||||
| Income tax (benefit) expense | (0.3 | ) | 4.7 | |||||
| Net loss | $ | (53.3 | ) | $ | (266.6 | ) | ||
| Loss per share: | ||||||||
| Basic loss per share | $ | (0.17 | ) | $ | (0.88 | ) | ||
| Diluted loss per share | (0.17 | ) | (0.88 | ) | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 304.7 | 304.0 | ||||||
| Diluted | 304.7 | 304.0 | ||||||
| Percentage of Net Sales: | ||||||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 75.3 | 76.9 | ||||||
| Gross profit | 24.7 | 23.1 | ||||||
| Selling, general and administrative expenses | 27.8 | 33.4 | ||||||
| Asset Impairments | — | 0.1 | ||||||
| Operating loss | (3.1 | ) | (10.4 | ) | ||||
| Interest (income) expense, net | (0.9 | ) | — | |||||
| Other income, net | — | — | ||||||
| Loss before income taxes | (2.2 | ) | (10.4 | ) | ||||
| Income tax (benefit) expense | — | 0.2 | ||||||
| Net loss | (2.2 | )% | (10.6 | )% | ||||
GameStop Corp.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
| July 29, 2023 | July 30, 2022 | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 894.7 | $ | 908.9 | ||||
| Marketable securities | 300.0 | — | ||||||
| Receivables, net of allowance of $2.2 and $3.5, respectively | 75.6 | 99.6 | ||||||
| Merchandise inventories, net | 676.9 | 734.8 | ||||||
| Prepaid expenses and other current assets | 58.0 | 275.9 | ||||||
| Total current assets | 2,005.2 | 2,019.2 | ||||||
| Property and equipment, net of accumulated depreciation of $983.0 and $990.1, respectively | 119.3 | 146.8 | ||||||
| Operating lease right-of-use assets | 583.0 | 554.3 | ||||||
| Deferred income taxes | 17.6 | 16.7 | ||||||
| Other noncurrent assets | 78.6 | 62.5 | ||||||
| Total assets | $ | 2,803.7 | $ | 2,799.5 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 378.0 | ||||||
