GameStop Reports Second Quarter Fiscal Year 2022 Results
Grapevine, TX — GameStop Corp. released financial results for the second quarter ended July 30, 2022. 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 http://investor.GameStop.com.
SECOND QUARTER OVERVIEW
- Net sales were $1.136 billion for the quarter, compared to $1.183 billion in the prior year’s second quarter.
- Sales attributable to collectibles, which is a segment the Company intends to grow over the long-term, were $223.2 million for the quarter, compared to $177.2 million in the prior year’s second quarter.
- Selling, general and administrative expenses were $387.5 million for the quarter, representing a sequential decline of 14.3% from the first quarter of 2022 and reflecting, in part, the Company’s focus on right-sizing costs following a period of significant investment in long-term initiatives.
- Inventory was $734.8 million at the close of the quarter, compared to $596.4 million at the close of the prior year’s second quarter, reflecting the Company’s focus on maintaining adequate in-stock levels to meet customer demand and offset lingering supply chain headwinds.
- Followed the launch of the Company’s digital wallet by launching the Company’s non-fungible token (“NFT”) marketplace to allow gamers, creators, collectors and others to buy, sell and trade NFTs.
- Modernized and strengthened the Company’s systems through the implementation of SAP.
- Ended the period with cash and cash equivalents of $908.9 million as well as no debt other than a low-interest, unsecured term loan associated with the French government’s response to COVID-19.
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) |
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| 13 Weeks ended
July 30, 2022 |
13 Weeks ended
July 31, 2021 |
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| Net sales | $ | 1,136.0 | $ | 1,183.4 | ||||
| Cost of sales | 853.8 | 862.5 | ||||||
| Gross profit | 282.2 | 320.9 | ||||||
| Selling, general and administrative expenses | 387.5 | 378.9 | ||||||
| Asset Impairments | 2.5 | — | ||||||
| Operating loss | (107.8 | ) | (58.0 | ) | ||||
| Interest (income) expense, net | (0.3 | ) | 0.5 | |||||
| Loss before income taxes | (107.5 | ) | (58.5 | ) | ||||
| Income tax expense | 1.2 | 3.1 | ||||||
| Net loss | $ | (108.7 | ) | $ | (61.6 | ) | ||
| Loss per share: | ||||||||
| Basic loss per share | $ | (0.36 | ) | $ | (0.21 | ) | ||
| Diluted loss per share | (0.36 | ) | (0.21 | ) | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 304.2 | 290.4 | ||||||
| Diluted | 304.2 | 290.4 | ||||||
| Percentage of Net Sales: | ||||||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 75.2 | 72.9 | ||||||
| Gross profit | 24.8 | 27.1 | ||||||
| Selling, general and administrative expenses | 34.1 | 32.0 | ||||||
| Asset Impairments | 0.2 | — | ||||||
| Operating loss | (9.5 | ) | (4.9 | ) | ||||
| Interest (income) expense, net | — | — | ||||||
| Loss before income taxes | (9.5 | ) | (4.9 | ) | ||||
| Income tax expense | 0.1 | 0.3 | ||||||
| Net loss | (9.6 | )% | (5.2 | )% | ||||
| GameStop Corp.
Consolidated Statements of Operations (in millions, except per share data) (unaudited) |
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| 26 Weeks ended
July 30, 2022 |
26 Weeks ended
July 31, 2021 |
|||||||
| Net sales | $ | 2,514.4 | $ | 2,460.2 | ||||
| Cost of sales | 1,933.7 | 1,809.2 | ||||||
| Gross profit | 580.7 | 651.0 | ||||||
| Selling, general and administrative expenses | 839.7 | 749.2 | ||||||
| Asset Impairments | 2.5 | 0.6 | ||||||
| Operating loss | (261.5 | ) | (98.8 | ) | ||||
| Interest expense, net | 0.4 | 25.2 | ||||||
| Loss before income taxes | (261.9 | ) | (124.0 | ) | ||||
| Income tax expense | 4.7 | 4.4 | ||||||
| Net loss | $ | (266.6 | ) | $ | (128.4 | ) | ||
| Loss per share: | ||||||||
| Basic loss per share | $ | (0.88 | ) | $ | (0.46 | ) | ||
| Diluted loss per share | (0.88 | ) | (0.46 | ) | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 304.0 | 277.2 | ||||||
| Diluted | 304.0 | 277.2 | ||||||
| Percentage of Net Sales: | ||||||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales | 76.9 | 73.5 | ||||||
| Gross profit | 23.1 | 26.5 | ||||||
| Selling, general and administrative expenses | 33.4 | 30.5 | ||||||
| Asset Impairments | 0.1 | — | ||||||
| Operating loss | (10.4 | ) | (4.0 | ) | ||||
| Interest expense, net | — | 1.0 | ||||||
| Loss before income taxes | (10.4 | ) | (5.0 | ) | ||||
| Income tax expense | 0.2 | 0.2 | ||||||
| Net loss | (10.6 | )% | (5.2 | )% | ||||
| GameStop Corp.
Condensed Consolidated Balance Sheets (in millions) (unaudited) |
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| July 30, 2022 | July 31, 2021 | |||||
| ASSETS: | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 908.9 | $ | 1,720.4 | ||
| Receivables, net of allowance of $3.5 and $3.7, respectively | 99.6 | 68.5 | ||||
| Merchandise inventories | 734.8 | 596.4 | ||||
| Prepaid expenses and other current assets | 275.9 | 271.7 | ||||
| Total current assets | 2,019.2 | 2,657.0 | ||||
| Property and equipment, net of accumulated depreciation of $990.1 and $1,113.7, respectively | 146.8 | 186.6 | ||||
| Operating lease right-of-use assets | 554.3 | 645.2 | ||||
| Deferred income taxes | 16.7 | — | ||||
| Other noncurrent assets | 62.5 | 57.0 | ||||
| Total assets | $ | 2,799.5 | $ | 3,545.8 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 217.4 | $ | 409.7 | ||
| Accrued liabilities and other current liabilities | 512.1 | 563.1 | ||||
| Current portion of operating lease liabilities | 194.0 | 221.5 | ||||
| Current portion of long-term debt | 8.9 | — | ||||
| Total current liabilities | 932.4 | 1,194.3 | ||||
| Long-term debt, net | 32.1 | 47.5 | ||||
| Operating lease liabilities | 367.4 | 432.0 | ||||
| Other long-term liabilities | 124.1 | 20.0 | ||||
| Total liabilities | 1,456.0 | 1,693.8 | ||||
| Total stockholders’ equity | 1,343.5 | 1,852.0 | ||||
| Total liabilities and stockholders’ equity | $ | 2,799.5 | $ | 3,545.8 | ||
| GameStop Corp.
Consolidated Statements of Cash Flows (in millions) (unaudited) |
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| 13 Weeks ended
July 30, 2022 |
13 Weeks ended
July 31, 2021 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (108.7 | ) | $ | (61.6 | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 15.3 | 17.6 | ||||||
| Stock-based compensation expense | 7.8 | 8.8 | ||||||
| Asset impairments | 2.5 | — | ||||||
| Loss on disposal of property and equipment, net | 1.2 | 0.1 | ||||||
| Other | (0.2 | ) | (0.1 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables, net | 3.0 | 33.1 | ||||||
| Merchandise inventories | 179.5 | (31.2 | ) | |||||
| Prepaid expenses and other current assets | 2.9 | (1.1 | ) | |||||
| Prepaid income taxes and income taxes payable | (2.6 | ) | (12.6 | ) | ||||
| Accounts payable and accrued liabilities | (204.2 | ) | 36.6 | |||||
| Operating lease right-of-use assets and liabilities | 0.6 | (1.1 | ) | |||||
| Changes in other long-term liabilities | (0.5 | ) | — | |||||
| Net cash flows used in operating activities | (103.4 | ) | (11.5 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of digital assets | 0.4 | — | ||||||
| Capital expenditures | (20.5 | ) | (13.5 | ) | ||||
| Other | — | (0.1 | ) | |||||
| Net cash flows used in investing activities | (20.1 | ) | (13.6 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock, net of costs | — | 1,121.1 | ||||||
| Settlements of stock-based awards | (1.9 | ) | (86.7 | ) | ||||
| Net cash flows (used in) provided by financing activities | (1.9 | ) | 1,034.4 | |||||
| Exchange rate effect on cash, cash equivalents and restricted cash | (1.2 | ) | (4.5 | ) | ||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (126.6 | ) | 1,004.8 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,083.6 | 770.8 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 957.0 | $ | 1,775.6 | ||||
| GameStop Corp.
Consolidated Statements of Cash Flows (in millions) (unaudited) |
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| 26 Weeks ended
July 30, 2022 |
26 Weeks ended
July 31, 2021 |
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| Cash flows from operating activities: | ||||||||
| Net loss | $ | (266.6 | ) | $ | (128.4 | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 32.4 | 36.3 | ||||||
| Stock-based compensation expense | 18.9 | 14.5 | ||||||
| Gain on sale of digital assets | (6.9 | ) | — | |||||
| Digital asset impairments | 33.7 | — | ||||||
| Asset impairments | 2.5 | 0.6 | ||||||
| Loss on disposal of property and equipment, net | 1.6 | 0.5 | ||||||
| Loss on retirement of debt | — | 18.2 | ||||||
| Other | (5.0 | ) | (0.6 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables, net | 39.3 | 36.2 | ||||||
| Merchandise inventories | 169.6 | 1.2 | ||||||
| Prepaid expenses and other current assets | (27.4 | ) | (4.0 | ) | ||||
| Prepaid income taxes and income taxes payable | 0.9 | (13.8 | ) | |||||
| Accounts payable and accrued liabilities | (384.0 | ) | 25.2 | |||||
| Operating lease right-of-use assets and liabilities | (15.8 | ) | (16.1 | ) | ||||
| Changes in other long-term liabilities | (0.5 | ) | (0.1 | ) | ||||
| Net cash flows used in operating activities | (407.3 | ) | (30.3 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of digital assets | 77.3 | — | ||||||
| Capital expenditures | (31.3 | ) | (28.2 | ) | ||||
| Other | — | (0.1 | ) | |||||
| Net cash flows provided by (used in) investing activities | 46.0 | (28.3 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock, net of costs | — | 1,672.8 | ||||||
| Payments of senior notes | — | (307.4 | ) | |||||
| Repayments of revolver borrowings | — | (25.0 | ) | |||||
| Settlements of stock-based awards | (3.0 | ) | (136.6 | ) | ||||
| Other | — | (0.1 | ) | |||||
| Net cash flows (used in) provided by financing activities | (3.0 | ) | 1,203.7 | |||||
| Exchange rate effect on cash, cash equivalents and restricted cash | 1.4 | (4.5 | ) | |||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (362.9 | ) | 1,140.6 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,319.9 | 635.0 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 957.0 | $ | 1,775.6 | ||||
| Schedule I
Sales Mix (in millions) (unaudited) |
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| 13 Weeks ended July 30, 2022 | 13 Weeks ended July 31, 2021 | |||||||||||
| Net | Percent | Net | Percent | |||||||||
| Net Sales (in millions): | Sales | of Total | Sales | of Total | ||||||||
| Hardware and accessories (1) | $ | 596.4 | 52.5 | % | $ | 609.6 | 51.5 | % | ||||
| Software (2) | 316.4 | 27.9 | 396.6 | 33.5 | ||||||||
| Collectibles | 223.2 | 19.6 | 177.2 | 15.0 | ||||||||
| Total | $ | 1,136.0 | 100.0 | % | $ | 1,183.4 | 100.0 | % | ||||
| 26 Weeks ended July 30, 2022 | 26 Weeks ended July 31, 2021 | |||||||||||
| Net | Percent | Net | Percent | |||||||||
| Net Sales (in millions): | Sales | of Total | Sales | of Total | ||||||||
| Hardware and accessories (1) | $ | 1,270.1 | 50.5 | % | $ | 1,313.1 | 53.4 | % | ||||
| Software (2) | 800.1 | 31.8 | 794.5 | 32.3 | ||||||||
| Collectibles | 444.2 | 17.7 | 352.6 | 14.3 | ||||||||
| Total | $ | 2,514.4 | 100.0 | % | $ | 2,460.2 | 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 results
The following tables reconcile the Company’s selling, general and administrative expenses (“SG&A”), operating loss, net loss and loss per share as presented in its unaudited consolidated statements of operations and prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) to its adjusted SG&A, adjusted operating loss, adjusted net loss, adjusted EBITDA and adjusted loss 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 reconciliations below are from continuing operations only.
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended | |||||||||||||
| July 30, 2022 | July 31, 2021 | July 30, 2022 | July 31, 2021 | |||||||||||||
| Adjusted SG&A | ||||||||||||||||
| SG&A | $ | 387.5 | $ | 378.9 | $ | 839.7 | $ | 749.2 | ||||||||
| Transformation costs(1)(3) | 0.9 | (6.5 | ) | 0.9 | (24.7 | ) | ||||||||||
| Significant transactions(2) | — | (0.2 | ) | — | (0.4 | ) | ||||||||||
| Divestitures and other(3) | — | 0.1 | — | (0.1 | ) | |||||||||||
| Adjusted SG&A | $ | 388.4 | $ | 372.3 | $ | 840.6 | $ | 724.0 | ||||||||
| Adjusted Operating Loss | ||||||||||||||||
| Operating loss | $ | (107.8 | ) | $ | (58.0 | ) | $ | (261.5 | ) | $ | (98.8 | ) | ||||
| Transformation costs(1)(3) | (0.9 | ) | 6.5 | (0.9 | ) | 24.7 | ||||||||||
| Asset impairments | 2.5 | — | 2.5 | 0.6 | ||||||||||||
| Significant transactions(2) | — | 0.2 | — | 0.4 | ||||||||||||
| Divestitures and other(3) | — | (0.1 | ) | — | 0.1 | |||||||||||
| Adjusted operating loss | $ | (106.2 | ) | $ | (51.4 | ) | $ | (259.9 | ) | $ | (73.0 | ) | ||||
| Adjusted Net Loss | ||||||||||||||||
| Net loss | $ | (108.7 | ) | $ | (61.6 | ) | $ | (266.6 | ) | $ | (128.4 | ) | ||||
| Transformation costs(1)(3) | (0.9 | ) | 6.5 | (0.9 | ) | 24.7 | ||||||||||
| Asset impairments | 2.5 | — | 2.5 | 0.6 | ||||||||||||
| Significant transactions(2) | — | 0.2 | — | 18.6 | ||||||||||||
| Divestitures and other(3) | — | (0.1 | ) | — | 0.1 | |||||||||||
| Adjusted net loss | $ | (107.1 | ) | $ | (55.0 | ) | $ | (265.0 | ) | $ | (84.4 | ) | ||||
| Adjusted loss per share | ||||||||||||||||
| Basic | $ | (0.35 | ) | $ | (0.19 | ) | $ | (0.87 | ) | $ | (0.30 | ) | ||||
| Diluted | (0.35 | ) | (0.19 | ) | (0.87 | ) | (0.30 | ) | ||||||||
| Number of shares used in adjusted calculation | ||||||||||||||||
| Basic | 304.2 | 290.4 | 304.0 | 277.2 | ||||||||||||
| Diluted | 304.2 | 290.4 | 304.0 | 277.2 | ||||||||||||
| (1) Current year 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. Prior year includes cash severance and stock-based compensation costs for key personnel that separated from the Company and expenses for consultants and advisors related to transformation initiatives. | ||||||||||||||||
| (2) Prior year includes transaction costs associated with the ATM offering. Adjusted net loss in the prior year also includes the impact of the make-whole premium and accelerated amortization associated with the voluntary early redemption of the 2023 Senior Notes. | ||||||||||||||||
| (3) Prior year amounts related to cash severance costs and stock-based compensation have been reclassified to conform to current year presentation. | ||||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended | |||||||||||||
| July 30, 2022 | July 31, 2021 | July 30, 2022 | July 31, 2021 | |||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||||||||||||
| Net loss | $ | (108.7 | ) | $ | (61.6 | ) | $ | (266.6 | ) | $ | (128.4 | ) | ||||
| Interest (income) expense, net(1) | (0.3 | ) | 0.5 | 0.4 | 25.2 | |||||||||||
| Depreciation and amortization | 15.3 | 17.6 | 32.4 | 36.3 | ||||||||||||
| Income tax expense | 1.2 | 3.1 | 4.7 | 4.4 | ||||||||||||
| EBITDA | $ | (92.5 | ) | $ | (40.4 | ) | $ | (229.1 | ) | $ | (62.5 | ) | ||||
| Stock-based compensation | 12.8 | 4.3 | 23.9 | 6.5 | ||||||||||||
| Transformation costs(2)(3) | (0.9 | ) | 6.5 | (0.9 | ) | 24.7 | ||||||||||
| Asset impairments | 2.5 | — | 2.5 | 0.6 | ||||||||||||
| Significant transactions(1) | — | 0.2 | — | 0.4 | ||||||||||||
| Divestitures and other (3) | — | (0.1 | ) | — | 0.1 | |||||||||||
| Adjusted EBITDA | $ | (78.1 | ) | $ | (29.5 | ) | $ | (203.6 | ) | $ | (30.2 | ) | ||||
| (1) Prior year includes transaction costs associated with the ATM offering and the impact of the make-whole premium and accelerated amortization associated with the voluntary early redemption of the 2023 Senior Notes. | ||||||||||||||||
| (2) Current year 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. Prior year includes cash severance and stock-based compensation costs for key personnel that separated from the Company and expenses for consultants and advisors related to transformation initiatives. | ||||||||||||||||
| (3) Prior year amounts related to cash severance costs and stock-based compensation have been reclassified to conform to current year presentation. | ||||||||||||||||
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended | |||||||||||||
| July 30, 2022 | July 31, 2021 | July 30, 2022 | July 31, 2021 | |||||||||||||
| Net cash flows used in operating activities | $ | (103.4 | ) | $ | (11.5 | ) | $ | (407.3 | ) | $ | (30.3 | ) | ||||
| Capital expenditures | (20.5 | ) | (13.5 | ) | (31.3 | ) | (28.2 | ) | ||||||||
| Free cash flow | $ | (123.9 | ) | $ | (25.0 | ) | $ | (438.6 | ) | $ | (58.5 | ) | ||||
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