GameStop Corp. (NYSE: GME) (“GameStop” or the “Company”) today
released financial results for the first quarter ended May 4, 2024.
The Company’s condensed and consolidated financial statements,
including GAAP and non-GAAP results, are below.
FIRST QUARTER OVERVIEW
- Net sales were $0.882
billion for the first quarter, compared to $1.237 billion in the
prior year's first quarter.
- Selling, general and
administrative (“SG&A") expenses were $295.1 million, or 33.5%
of net sales for the first quarter, compared to $345.7 million, or
27.9% of net sales, in the prior year's first quarter.
- Net loss was $32.3
million for the first quarter, compared to a net loss of $50.5
million for the prior year’s first quarter.
- Cash, cash
equivalents and marketable securities were $1.083 billion at the
close of the quarter.
- Long-term debt
remains limited to a 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.
NON-GAAP MEASURES AND OTHER
METRICSAs 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 expenses, 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 expenses, 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 (used in) provided by
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 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, 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.
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; 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; risks associated with inventory shrinkage; 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;
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; potential
future litigation and other legal proceedings; the value of the
Company’s securities holdings; concentration of the Company’s
investment portfolio into one or few holdings; the recognition of
losses in a particular security even if the Company has not sold
the security; 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; risks associated with the
Company’s investment in marketable, nonmarketable and
interest-bearing securities, including the impact of such
investments on Company’s financial results; and the Company’s
ability to maintain effective control over financial reporting.
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
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.Condensed Consolidated
Statements of Operations(in millions, except per share
data)(unaudited) |
|
|
|
13 Weeks ended May 4, 2024 |
|
13 Weeks ended April 29, 2023 |
Net sales |
|
$ |
881.8 |
|
|
$ |
1,237.1 |
|
Cost of sales |
|
|
637.3 |
|
|
|
949.8 |
|
Gross profit |
|
|
244.5 |
|
|
|
287.3 |
|
Selling, general and administrative expenses |
|
|
295.1 |
|
|
|
345.7 |
|
Operating loss |
|
|
(50.6 |
) |
|
|
(58.4 |
) |
Interest income, net |
|
|
(14.9 |
) |
|
|
(9.7 |
) |
Other expense, net |
|
|
— |
|
|
|
1.9 |
|
Loss before income taxes |
|
|
(35.7 |
) |
|
|
(50.6 |
) |
Income tax benefit |
|
|
(3.4 |
) |
|
|
(0.1 |
) |
Net loss |
|
$ |
(32.3 |
) |
|
$ |
(50.5 |
) |
|
|
|
|
|
Loss per share: |
|
|
|
|
Basic loss per share |
|
$ |
(0.11 |
) |
|
$ |
(0.17 |
) |
Diluted loss per share |
|
|
(0.11 |
) |
|
|
(0.17 |
) |
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
Basic |
|
|
305.9 |
|
|
|
304.5 |
|
Diluted |
|
|
305.9 |
|
|
|
304.5 |
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales |
|
|
72.3 |
|
|
|
76.8 |
|
Gross profit |
|
|
27.7 |
|
|
|
23.2 |
|
Selling, general and administrative expenses |
|
|
33.5 |
|
|
|
27.9 |
|
Operating loss |
|
|
(5.7 |
) |
|
|
(4.7 |
) |
Interest income, net |
|
|
(1.7 |
) |
|
|
(0.8 |
) |
Other expense, net |
|
|
— |
|
|
|
0.2 |
|
Loss before income taxes |
|
|
(4.0 |
) |
|
|
(4.1 |
) |
Income tax benefit |
|
|
(0.4 |
) |
|
|
— |
|
Net loss |
|
(3.7 |
)% |
|
(4.1 |
)% |
GameStop Corp.Condensed Consolidated
Balance Sheets(in millions)(unaudited) |
|
|
|
May 4, 2024 |
|
April 29, 2023 |
ASSETS: |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
999.9 |
|
$ |
1,057.0 |
Marketable securities |
|
|
83.0 |
|
|
253.1 |
Receivables, net of allowance of $4.4 and $2.2, respectively |
|
|
58.9 |
|
|
119.2 |
Merchandise inventories |
|
|
675.8 |
|
|
759.5 |
Prepaid expenses and other current assets |
|
|
62.1 |
|
|
65.8 |
Total current assets |
|
|
1,879.7 |
|
|
2,254.6 |
Property and equipment, net of accumulated depreciation of $843.6
and $988.3, respectively |
|
|
82.4 |
|
|
123.6 |
Operating lease right-of-use assets |
|
|
542.0 |
|
|
595.8 |
Deferred income taxes |
|
|
17.5 |
|
|
17.5 |
Other noncurrent assets |
|
|
65.5 |
|
|
78.7 |
Total assets |
|
$ |
2,587.1 |
|
$ |
3,070.2 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
282.7 |
|
$ |
561.4 |
Accrued liabilities and other current liabilities |
|
|
377.1 |
|
|
546.4 |
Current portion of operating lease liabilities |
|
|
177.7 |
|
|
200.8 |
Current portion of long-term debt |
|
|
10.8 |
|
|
10.9 |
Total current liabilities |
|
|
848.3 |
|
|
1,319.5 |
Long-term debt, net |
|
|
14.9 |
|
|
26.3 |
Operating lease liabilities |
|
|
385.3 |
|
|
412.5 |
Other long-term liabilities |
|
|
31.3 |
|
|
40.3 |
Total liabilities |
|
|
1,279.8 |
|
|
1,798.6 |
Total stockholders’ equity |
|
|
1,307.3 |
|
|
1,271.6 |
Total liabilities and stockholders’ equity |
|
$ |
2,587.1 |
|
$ |
3,070.2 |
|
|
|
|
|
GameStop Corp.Condensed Consolidated
Statements of Cash Flows(in millions)(unaudited) |
|
|
|
13 Weeks ended May 4, 2024 |
|
13 Weeks ended April 29, 2023 |
Cash flows from operating activities: |
|
|
|
|
Net loss |
|
$ |
(32.3 |
) |
|
$ |
(50.5 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
|
Depreciation and amortization |
|
|
16.8 |
|
|
|
13.7 |
|
Stock-based compensation expense |
|
|
0.6 |
|
|
|
7.9 |
|
Loss on disposal of property and equipment, net |
|
|
0.3 |
|
|
|
0.6 |
|
Other |
|
|
(0.6 |
) |
|
|
0.2 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
|
33.4 |
|
|
|
35.6 |
|
Merchandise inventories |
|
|
(43.2 |
) |
|
|
(83.1 |
) |
Prepaid expenses and other current assets |
|
|
8.5 |
|
|
|
(4.0 |
) |
Prepaid income taxes and income taxes payable |
|
|
(5.1 |
) |
|
|
(0.2 |
) |
Accounts payable and accrued liabilities |
|
|
(87.8 |
) |
|
|
(22.3 |
) |
Operating lease right-of-use assets and liabilities |
|
|
1.1 |
|
|
|
(0.6 |
) |
Changes in other long-term liabilities |
|
|
(1.5 |
) |
|
|
— |
|
Net cash flows used in operating activities |
|
|
(109.8 |
) |
|
|
(102.7 |
) |
Cash flows from investing activities: |
|
|
|
|
Proceeds from sale of digital assets |
|
|
— |
|
|
|
1.3 |
|
Purchases of marketable securities |
|
|
(7.5 |
) |
|
|
(211.0 |
) |
Proceeds from the maturities and sales of marketable
securities |
|
|
201.9 |
|
|
|
212.2 |
|
Capital expenditures |
|
|
(4.9 |
) |
|
|
(9.1 |
) |
Other |
|
|
0.3 |
|
|
|
(0.1 |
) |
Net cash flows provided by (used in) investing activities |
|
|
189.8 |
|
|
|
(6.7 |
) |
Cash flows from financing activities: |
|
|
|
|
Settlements of stock-based awards |
|
|
— |
|
|
|
(0.1 |
) |
Repayments of French term loans |
|
|
(2.7 |
) |
|
|
(2.7 |
) |
Net cash flows used in financing activities |
|
|
(2.7 |
) |
|
|
(2.8 |
) |
Exchange rate effect on cash, cash equivalents and restricted
cash |
|
|
1.3 |
|
|
|
(4.0 |
) |
Decrease in cash, cash equivalents and restricted cash |
|
|
78.6 |
|
|
|
(116.2 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
|
938.9 |
|
|
|
1,196.0 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
1,017.5 |
|
|
$ |
1,079.8 |
|
|
|
|
|
|
Schedule ISales Mix(in
millions)(unaudited) |
|
|
|
13 Weeks ended May 4, 2024 |
|
13 Weeks ended April 29, 2023 |
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales: |
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
Hardware and accessories (1) |
|
$ |
505.3 |
|
57.3 |
% |
|
$ |
725.8 |
|
58.7 |
% |
Software (2) |
|
|
239.7 |
|
27.2 |
|
|
|
338.3 |
|
27.3 |
|
Collectibles |
|
|
136.8 |
|
15.5 |
|
|
|
173.0 |
|
14.0 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
881.8 |
|
100.0 |
% |
|
$ |
1,237.1 |
|
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.(2) Includes sales
of new and pre-owned video game software, digital software and PC
entertainment software. |
GameStop Corp.Schedule
II(in millions, except per share data)(unaudited)
Non-GAAP resultsThe following
tables reconcile the Company's selling, general and administrative
expenses ("SG&A expense"), operating loss, net loss and loss
per share as presented in its unaudited consolidated statements of
operations and prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") to its adjusted SG&A expense,
adjusted operating loss, adjusted net loss, adjusted EBITDA and
adjusted loss per share. The diluted weighted-average shares
outstanding used to calculate 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 reconciliations below are
from continuing operations only.
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
May 4, 2024 |
|
April 29, 2023 |
Adjusted SG&A expense |
SG&A expense |
|
$ |
295.1 |
|
|
$ |
345.7 |
|
Transformation costs(1) |
|
|
4.4 |
|
|
|
(7.2 |
) |
Adjusted SG&A expense |
|
$ |
299.5 |
|
|
$ |
338.5 |
|
|
|
|
|
|
Adjusted Operating Loss |
|
|
|
|
Operating loss |
|
$ |
(50.6 |
) |
|
$ |
(58.4 |
) |
Transformation costs(1) |
|
|
(4.4 |
) |
|
|
7.2 |
|
Adjusted operating loss |
|
$ |
(55.0 |
) |
|
$ |
(51.2 |
) |
|
|
|
|
|
Adjusted Net Loss |
|
|
|
|
Net loss |
|
$ |
(32.3 |
) |
|
$ |
(50.5 |
) |
Transformation costs(1) |
|
|
(4.4 |
) |
|
|
7.2 |
|
Divestitures and other |
|
|
— |
|
|
|
1.0 |
|
Adjusted net loss |
|
$ |
(36.7 |
) |
|
$ |
(42.3 |
) |
|
|
|
|
|
Adjusted loss per share |
|
|
|
|
Basic |
|
$ |
(0.12 |
) |
|
$ |
(0.14 |
) |
Diluted |
|
|
(0.12 |
) |
|
|
(0.14 |
) |
|
|
|
|
|
Number of shares used in adjusted calculation |
|
|
|
|
Basic |
|
|
305.9 |
|
|
|
304.5 |
|
Diluted |
|
|
305.9 |
|
|
|
304.5 |
|
|
|
|
|
|
(1) Transformation costs include severance, stock-based
compensation forfeitures related to workforce optimization efforts
and departures of key personnel, and other costs in connection with
our transformation initiatives. |
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
May 4, 2024 |
|
April 29, 2023 |
Reconciliation of Net Loss to Adjusted EBITDA |
|
|
|
|
Net loss |
|
$ |
(32.3 |
) |
|
$ |
(50.5 |
) |
Interest income, net |
|
|
(14.9 |
) |
|
|
(9.7 |
) |
Depreciation and amortization |
|
|
16.8 |
|
|
|
13.7 |
|
Income tax benefit |
|
|
(3.4 |
) |
|
|
(0.1 |
) |
EBITDA |
|
$ |
(33.8 |
) |
|
$ |
(46.6 |
) |
Stock-based compensation |
|
|
6.9 |
|
|
|
9.0 |
|
Transformation costs(1) |
|
|
(4.4 |
) |
|
|
7.2 |
|
Divestitures and other |
|
|
— |
|
|
|
1.0 |
|
Adjusted EBITDA |
|
$ |
(31.3 |
) |
|
$ |
(29.4 |
) |
|
|
|
|
|
(1) Transformation costs include severance, stock-based
compensation forfeitures related to workforce optimization efforts
and departures of key personnel, and other costs in connection with
our transformation initiatives. |
GameStop Corp.Schedule
III(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. Free cash flow is considered a non-GAAP financial measure.
Management believes, however, that free cash flow, which measures
our ability to generate additional cash from our business
operations, is an important financial measure for use by investors
in evaluating the company’s financial performance.
|
13 Weeks Ended |
|
13 Weeks Ended |
|
May 4, 2024 |
|
April 29, 2023 |
Net cash flows used in operating activities |
$ |
(109.8 |
) |
|
$ |
(102.7 |
) |
Capital expenditures |
|
(4.9 |
) |
|
|
(9.1 |
) |
Free cash flow |
$ |
(114.7 |
) |
|
$ |
(111.8 |
) |
Non-GAAP Measures and Other
MetricsAdjusted EBITDA, adjusted SG&A expense,
adjusted operating loss and adjusted net loss per share 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
provide 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 income, net
and depreciation and amortization, excluding stock-based
compensation, certain 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 SG&A expense, adjusted operating loss,
adjusted net loss and adjusted loss per share 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 SG&A expense, adjusted
operating loss, adjusted net loss and adjusted net loss per share
are 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 SG&A expense, adjusted operating loss,
adjusted net income and adjusted earnings (loss) per share 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.
Contact
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