THIRD QUARTER OVERVIEW

• Net sales were $1.186 billion, compared to $1.297 billion in the prior year’s third quarter.

• Sales attributable to new and expanded brand relationships were strong in the quarter, while sales in the collectibles category remained strong on a year-to-date basis.

• Selling, general and administrative expenses (“SG&A”) were $387.9 million, or 32.7% of sales, compared to $421.5 million, or 32.5% of sales, in the prior year’s third quarter. Notably, SG&A as a percentage of revenue was down on a sequential basis from 34.1% in Q2 of this year, reflecting the Company’s ongoing cost reduction efforts.

• Inventory was $1.131 billion at the close of the period, compared to $1.141 billion at the close of the prior year’s third quarter.

• Cash, cash equivalents and marketable securities were $1.042 billion at the close of the third quarter.

• Long-term debt remains limited to a low-interest, unsecured term loan associated with the French government’s response to COVID-19.

CONFERENCE CALL INFORMATION

The Company will host an investor conference call today, December 7, 2022, at 5:00 pm ET to review its financial results. The phone number for the investor conference call is 1-877-407-6169 and the confirmation code is 13734613. This call, along with supplemental information, can also be accessed at http://investor.GameStop.com. A recording of the conference call will be made available on the Company’s investor relations website for two months.

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, adjusted operating income (loss), adjusted net income (loss), adjusted diluted 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 selling, general and administrative expenses (“Adjusted SG&A”), adjusted operating income (loss), adjusted net income (loss), adjusted diluted earnings (loss) per share and adjusted EBITDA exclude the effect of items such as transformation costs, asset impairments, store closure costs, severance, as well as divestiture costs. Results reported as constant currency exclude the impact of fluctuations in foreign currency exchange rates by converting the Company’s local currency financial results using the prior period exchange rates and comparing these adjusted amounts to the Company’s current period reported results. 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.

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 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.

GameStop Corp.
Schedule III
(in millions)
(unaudited)

Non-GAAP results

The 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.