GameStop Reports Second Quarter Fiscal 2019 Results
Outlines Core Tenets of New Strategic Plan and Doubles Operating Profit Improvement Goal to Exceed $200 Million on Run-Rate Basis by 2021
Grapevine, Texas (September 10, 2019)—GameStop Corp. (NYSE: GME), today reported sales and earnings for the second quarter ended August 3, 2019. The company also introduced the core tenets of its GameStop Reboot strategic plan for the future.
George Sherman, GameStop’s chief executive officer said, “We are committed to acting with a sense of urgency to address the areas of the business that are critical to achieving long-term success and value creation for all our stakeholders. We will set GameStop on the correct strategic path and fully leverage our unique position and brand in the video game industry. Our strategic plan is anchored on four tenets which include, optimizing the core business by driving efficiency and effectiveness, creating the social and cultural hub of gaming within each GameStop, building compelling digital capabilities, and transforming our vendor and partner relationships for an evolving video game industry. This is a compelling new strategic vision for the company, and we’ve already started to execute against all four pillars. We also remain committed to returning capital to shareholders and balancing that opportunity against the need to maintain a strong balance sheet to properly run our business and invest in responsible growth.”
GameStop Reboot—Strategic Update
As part of its go-forward plans, the company’s leadership outlined a strategy to improve the financial performance of the business and implement a series of initiatives that will support the long-term success of the business and value creation for stakeholders.
The four pillars to the strategic plan include:
Optimize the Core: Optimize the core business by improving efficiency and effectiveness across the organization, including cost restructuring, inventory management optimization, adding and growing high margin product categories, and rationalizing the global store base.
Become the Social / Cultural Hub for Gaming: Create the social and cultural hub of gaming across the GameStop platform by testing and improving existing core assets including the store experience, knowledgeable associates and the PowerUp Rewards loyalty program.
Build Digital Platform: Build compelling digital capabilities, including the recent relaunch of GameStop.com, to reach customers more broadly across the omni-channel platform and give them the full spectrum of content and access to products they desire.
Transform Vendor Partnerships: Transform our vendor and partner relationships to unlock additional high-margin revenue streams and optimize the lifetime value of every customer.
Second Quarter Results
Jim Bell, GameStop’s chief financial officer said, “While we experienced sales declines across a number of our categories during the quarter, these trends are consistent with what we have historically observed towards the end of a hardware cycle. We will continue to manage the underlying businesses to produce meaningful cash returns, while maintaining a strong balance sheet and investing responsibly in our strategic initiatives.”
GameStop’s second quarter total global sales decreased 14.3% (13.1% in constant currency) to $1.3 billion, resulting in a consolidated comparable store sales decrease of 11.6%.
New hardware sales decreased 41.1%, reflective of recent announcements for next generation console launches in 2020.
New software sales decreased 5.3%, with growth in Nintendo Switch software titles more than offset by weaker title launches across other consoles in the quarter compared to last year.
Accessories sales decreased 9.5%.
Pre-owned sales declined 17.5% with declines in hardware and software.
Digital receipts decreased 11.2% to $227.2 million due to weaker title launches in the quarter compared to last year.
Collectibles sales increased 21.2%, with continued strong double-digit growth in both domestic and international stores.
GameStop’s second quarter GAAP net income (loss) was ($415.3) million, or ($4.15) per diluted share, compared to net income (loss) of ($24.9) million, or ($0.24) per diluted share, in the prior-year quarter, which included the Spring Mobile business. Second quarter fiscal 2019 results include asset impairment charges and other items of $400.9 million ($381.6 million net of taxes), or $3.82 per diluted share, primarily related to impairment of goodwill. Second quarter fiscal 2018 results included a non-operating tax charge of $29.6 million, or $0.29 per diluted share.
The following information was filed by Gamestop Corp. (GME) on Tuesday, September 10, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.