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GameStop Discloses Second Quarter 2023 Results image

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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