GameStop Discloses Second Quarter 2023 Results
Grapevine, TX — GameStop Corp. 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.
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 | $ | 217.4 | ||||
| Accrued liabilities and other current liabilities | 487.5 | 512.1 | ||||||
| Current portion of operating lease liabilities | 194.9 | 194.0 | ||||||
| Current portion of long-term debt | 11.0 | 8.9 | ||||||
| Total current liabilities | 1,071.4 | 932.4 | ||||||
| Long-term debt, net | 23.6 | 32.1 | ||||||
| Operating lease liabilities | 405.7 | 367.4 | ||||||
| Other long-term liabilities | 35.8 | 124.1 | ||||||
| Total liabilities | 1,536.5 | 1,456.0 | ||||||
| Total stockholders’ equity | 1,267.2 | 1,343.5 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,803.7 | $ | 2,799.5 | ||||
GameStop Corp.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| 13 Weeks ended July 29, 2023 |
13 Weeks ended July 30, 2022 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (2.8 | ) | $ | (108.7 | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 12.6 | 15.3 | ||||||
| Stock-based compensation expense, net | (0.3 | ) | 7.8 | |||||
| Asset impairments | — | 2.5 | ||||||
| Loss on disposal of property and equipment, net | — | 1.2 | ||||||
| Other, net | (3.1 | ) | (0.2 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables, net | 43.4 | 3.0 | ||||||
| Merchandise inventories, net | 83.5 | 179.5 | ||||||
| Prepaid expenses and other current assets | 8.0 | 2.9 | ||||||
| Prepaid income taxes and income taxes payable | (1.1 | ) | (2.6 | ) | ||||
| Accounts payable and accrued liabilities | (245.1 | ) | (204.2 | ) | ||||
| Operating lease right-of-use assets and liabilities | (2.8 | ) | 0.6 | |||||
| Changes in other long-term liabilities | (1.4 | ) | (0.5 | ) | ||||
| Net cash flows used in operating activities | (109.1 | ) | (103.4 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of digital assets | 1.5 | 0.4 | ||||||
| Purchases of marketable securities | (102.0 | ) | — | |||||
| Proceeds from the maturities and sales of marketable securities | 58.3 | — | ||||||
| Capital expenditures | (10.1 | ) | (20.5 | ) | ||||
| Other | 0.1 | — | ||||||
| Net cash flows used in investing activities | (52.2 | ) | (20.1 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Settlements of stock-based awards | — | (1.9 | ) | |||||
| Repayments of French term loans | (2.7 | ) | — | |||||
| Net cash flows used in financing activities | (2.7 | ) | (1.9 | ) | ||||
| Exchange rate effect on cash, cash equivalents and restricted cash | (0.6 | ) | (1.2 | ) | ||||
| Decrease in cash, cash equivalents and restricted cash | (164.6 | ) | (126.6 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,079.8 | 1,083.6 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 915.2 | $ | 957.0 | ||||
GameStop Corp.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| 26 Weeks ended July 29, 2023 |
26 Weeks ended July 30, 2022 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (53.3 | ) | $ | (266.6 | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 26.3 | 32.4 | ||||||
| Stock-based compensation expense, net | 7.6 | 18.9 | ||||||
| Asset impairments | — | 2.5 | ||||||
| Gain on sale of digital assets | — | (6.9 | ) | |||||
| Digital asset impairments | — | 33.7 | ||||||
| Loss on disposal of property and equipment, net | 0.6 | 1.6 | ||||||
| Other, net | (2.9 | ) | (5.0 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables, net | 79.0 | 39.3 | ||||||
| Merchandise inventories, net | 0.4 | 169.6 | ||||||
| Prepaid expenses and other current assets | 4.0 | (27.4 | ) | |||||
| Prepaid income taxes and income taxes payable | (1.3 | ) | 0.9 | |||||
| Accounts payable and accrued liabilities | (267.4 | ) | (384.0 | ) | ||||
| Operating lease right-of-use assets and liabilities | (3.4 | ) | (15.8 | ) | ||||
| Changes in other long-term liabilities | (1.4 | ) | (0.5 | ) | ||||
| Net cash flows used in operating activities | (211.8 | ) | (407.3 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of digital assets | 2.8 | 77.3 | ||||||
| Purchases of marketable securities | (313.0 | ) | — | |||||
| Proceeds from the maturities and sales of marketable securities | 270.5 | — | ||||||
| Capital expenditures | (19.2 | ) | (31.3 | ) | ||||
| Net cash flows (used in) provided by investing activities | (58.9 | ) | 46.0 | |||||
| Cash flows from financing activities: | ||||||||
| Settlements of stock-based awards | (0.1 | ) | (3.0 | ) | ||||
| Repayments of debt | (5.4 | ) | — | |||||
| Net cash flows used in financing activities | (5.5 | ) | (3.0 | ) | ||||
| Exchange rate effect on cash, cash equivalents and restricted cash | (4.6 | ) | 1.4 | |||||
| Decrease in cash, cash equivalents and restricted cash | (280.8 | ) | (362.9 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,196.0 | 1,319.9 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 915.2 | $ | 957.0 | ||||
Schedule I
Sales Mix
(in millions)
(unaudited)
| 13 Weeks ended July 29, 2023 | 13 Weeks ended July 30, 2022 | |||||||||||||
| Net | Percent | Net | Percent | |||||||||||
| Net Sales: | Sales | of Total | Sales | of Total | ||||||||||
| Hardware and accessories (1) | $ | 597.0 | 51.3 | % | $ | 596.4 | 52.5 | % | ||||||
| Software (2) | 397.0 | 34.1 | 316.4 | 27.9 | ||||||||||
| Collectibles | 169.8 | 14.6 | 223.2 | 19.6 | ||||||||||
| Total | $ | 1,163.8 | 100.0 | % | $ | 1,136.0 | 100.0 | % | ||||||
| 26 Weeks ended July 29, 2023 | 26 Weeks ended July 30, 2022 | |||||||||||||
| Net | Percent | Net | Percent | |||||||||||
| Net Sales: | Sales | of Total | Sales | of Total | ||||||||||
| Hardware and accessories (1) | $ | 1,322.8 | 55.1 | % | $ | 1,270.1 | 50.5 | % | ||||||
| Software (2) | 735.4 | 30.6 | 800.1 | 31.8 | ||||||||||
| Collectibles | 342.7 | 14.3 | 444.2 | 17.7 | ||||||||||
| Total | $ | 2,400.9 | 100.0 | % | $ | 2,514.4 | 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.
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended | |||||||||||||
| July 29, 2023 | July 30, 2022 | July 29, 2023 | July 30, 2022 | |||||||||||||
| Adjusted SG&A expense | ||||||||||||||||
| SG&A expense | $ | 322.5 | $ | 387.5 | $ | 668.2 | $ | 839.7 | ||||||||
| Transformation costs(1) | 4.1 | 0.9 | (3.1 | ) | 0.9 | |||||||||||
| Adjusted SG&A expense | $ | 326.6 | $ | 388.4 | $ | 665.1 | $ | 840.6 | ||||||||
| Adjusted Operating Loss | ||||||||||||||||
| Operating loss | $ | (16.6 | ) | $ | (107.8 | ) | $ | (75.0 | ) | $ | (261.5 | ) | ||||
| Transformation costs(1) | (4.1 | ) | (0.9 | ) | 3.1 | (0.9 | ) | |||||||||
| Asset impairments | — | 2.5 | — | 2.5 | ||||||||||||
| Adjusted operating loss | $ | (20.7 | ) | $ | (106.2 | ) | $ | (71.9 | ) | $ | (259.9 | ) | ||||
| Adjusted Net Loss | ||||||||||||||||
| Net loss | $ | (2.8 | ) | $ | (108.7 | ) | $ | (53.3 | ) | $ | (266.6 | ) | ||||
| Transformation costs(1) | (4.1 | ) | (0.9 | ) | 3.1 | (0.9 | ) | |||||||||
| Asset impairments | — | 2.5 | — | 2.5 | ||||||||||||
| Divestitures and other(2) | (2.1 | ) | — | (1.1 | ) | — | ||||||||||
| Adjusted net loss | $ | (9.0 | ) | $ | (107.1 | ) | $ | (51.3 | ) | $ | (265.0 | ) | ||||
| Adjusted loss per share | ||||||||||||||||
| Basic | $ | (0.03 | ) | $ | (0.35 | ) | $ | (0.17 | ) | $ | (0.87 | ) | ||||
| Diluted | (0.03 | ) | (0.35 | ) | (0.17 | ) | (0.87 | ) | ||||||||
| Number of shares used in adjusted calculation | ||||||||||||||||
| Basic | 304.8 | 304.2 | 304.7 | 304.0 | ||||||||||||
| Diluted | 304.8 | 304.2 | 304.7 | 304.0 | ||||||||||||
(1) For the three and six months ended July 29, 2023, transformation costs include severance, stock-based compensation forfeitures related to workforce optimization efforts in the U.S., and other costs in connection with our transformation initiatives. This amount excludes accelerated lease amortization and fixed asset costs which have not been factored into our non-GAAP measures, but are included in total transition costs. For the three and six months ended July 30, 2022, transformation costs includes the impact of stock-based compensation forfeitures partially offset by cash severance costs related to workforce optimization efforts in connection with our transformation initiatives.
(2) Divestitures and other includes an overall net gain from our divestiture of business operations in Europe.
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended | |||||||||||||
| July 29, 2023 | July 30, 2022 | July 29, 2023 | July 30, 2022 | |||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||||||||||||
| Net loss | $ | (2.8 | ) | $ | (108.7 | ) | $ | (53.3 | ) | $ | (266.6 | ) | ||||
| Interest (income) expense, net | (11.6 | ) | (0.3 | ) | (21.3 | ) | 0.4 | |||||||||
| Depreciation and amortization | 12.6 | 15.3 | 26.3 | 32.4 | ||||||||||||
| Income tax (benefit) expense | (0.2 | ) | 1.2 | (0.3 | ) | 4.7 | ||||||||||
| EBITDA | $ | (2.0 | ) | $ | (92.5 | ) | $ | (48.6 | ) | $ | (229.1 | ) | ||||
| Stock-based compensation | 9.2 | 12.8 | 18.2 | 23.9 | ||||||||||||
| Transformation costs(1) | (4.1 | ) | (0.9 | ) | 3.1 | (0.9 | ) | |||||||||
| Divestitures and other(2) | (2.1 | ) | — | (1.1 | ) | — | ||||||||||
| Asset impairments | — | 2.5 | — | 2.5 | ||||||||||||
| Adjusted EBITDA | $ | 1.0 | $ | (78.1 | ) | $ | (28.4 | ) | $ | (203.6 | ) | |||||
(1) For the three and six months ended July 29, 2023, transformation costs include severance, stock-based compensation forfeitures related to workforce optimization efforts in the U.S., and other costs in connection with our transformation initiatives. This amount excludes accelerated lease amortization and fixed asset costs which have not been factored into our non-GAAP measures, but are included in total transition costs. For the three and six months ended July 30, 2022, transformation costs includes the impact of stock-based compensation forfeitures partially offset by cash severance costs related to workforce optimization efforts in connection with our transformation initiatives.
(2) Divestitures and other includes an overall net gain from our divestiture of business operations in Europe.
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended | ||||||||||||
| July 29, 2023 | July 30, 2022 | July 29, 2023 | July 30, 2022 | ||||||||||||
| Net cash flows used in operating activities | $ | (109.1 | ) | $ | (103.4 | ) | $ | (211.8 | ) | $ | (407.3 | ) | |||
| Capital expenditures | (10.1 | ) | (20.5 | ) | (19.2 | ) | (31.3 | ) | |||||||
| Free cash flow | $ | (119.2 | ) | $ | (123.9 | ) | $ | (231.0 | ) | $ | (438.6 | ) | |||
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