UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 Form 10-Q

 ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED AUGUST 1, 2020JULY 31, 2021

OR
OR
 ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-32637
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GameStop Corp.
(Exact name of registrant as specified in its charter)
Delaware 20-2733559
(State or other jurisdiction of
incorporation or organization)
gme-20200801_g1.jpg
(I.R.S. Employer
Identification No.)
625 Westport Parkway76051
Grapevine,Texas
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(817) 424-2000

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common StockGMENYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒ No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer☐Accelerated filer☒Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒
Number of shares of $.001 par value Class A Common Stock outstanding as of September 2, 2020: 65,161,6101, 2021: 76,491,496


TABLE OF CONTENTS 
Part I — FINANCIAL INFORMATION
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PART II — OTHER INFORMATION
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PART I — FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except par value per share)
July 31,
2021		August 1,
2020		January 30,
2021
ASSETS
Current assets:
Cash and cash equivalents$1,720.4 $735.1 $508.5 
Restricted cash36.7 11.0 110.0 
Receivables, net68.5 83.1 105.3 
Merchandise inventories596.4 474.6 602.5 
Prepaid expenses and other current assets235.0 76.1 224.9 
Total current assets2,657.0 1,379.9 1,551.2 
Property and equipment, net186.6 219.7 201.2 
Operating lease right-of-use assets645.2 689.0 662.1 
Deferred income taxes— 29.2 — 
Long-term restricted cash18.5 12.5 16.5 
Other noncurrent assets38.5 44.9 41.6 
Total assets$3,545.8 $2,375.2 $2,472.6 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$409.7 $256.4 $341.8 
Accrued liabilities and other current liabilities563.1 580.7 626.8 
Current portion of operating lease liabilities221.5 218.8 227.4 
Short-term debt, including current portion of long-term debt, net— 221.3 121.7 
Borrowings under revolving line of credit— 35.0 25.0 
Total current liabilities1,194.3 1,312.2 1,342.7 
Long-term debt, net47.5 215.9 216.0 
Operating lease liabilities432.0 475.5 456.7 
Other long-term liabilities20.0 19.3 20.5 
Total liabilities1,693.8 2,022.9 2,035.9 
Commitments and contingencies (Note 7)000
Stockholders’ equity:
Class A common stock — $.001 par value; 300 shares authorized; 75.9, 65.2 and 65.3 shares issued and outstanding, respectively0.1 0.1 0.1 
Additional paid-in capital1,561.7 2.9 11.0 
Accumulated other comprehensive loss(56.3)(63.9)(49.3)
Retained earnings346.5 413.2 474.9 
Total stockholders’ equity1,852.0 352.3 436.7 
Total liabilities and stockholders’ equity$3,545.8 $2,375.2 $2,472.6 
August 1,
2020		August 3,
2019		February 1,
2020
ASSETS
Current assets:
Cash and cash equivalents$735.1 $424.0 $499.4 
Receivables, net83.1 122.4 141.9 
Merchandise inventories, net474.6 948.9 859.7 
Prepaid expenses and other current assets87.1 143.2 120.9 
Assets held-for-sale0 29.1 11.8 
Total current assets1,379.9 1,667.6 1,633.7 
Property and equipment, net219.7 312.0 275.9 
Operating lease right-of-use assets689.0 769.7 767.0 
Deferred income taxes29.2 157.8 83.0 
Other noncurrent assets57.4 80.8 60.1 
Total assets$2,375.2 $2,987.9 $2,819.7 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$256.4 $368.3 $380.8 
Accrued liabilities and other current liabilities580.7 593.7 617.5 
Current portion of operating lease liabilities218.8 240.3 239.4 
Short-term debt, including current portion of long-term debt, net221.3 0 0 
Borrowings under revolving line of credit35.0 0 0 
Liabilities held-for-sale0 14.5 0 
Total current liabilities1,312.2 1,216.8 1,237.7 
Long-term debt, net215.9 419.1 419.8 
Operating lease liabilities475.5 523.9 529.3 
Other long-term liabilities19.3 18.4 21.4 
Total liabilities2,022.9 2,178.2 2,208.2 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Class A common stock — $.001 par value; 300 shares authorized; 65.2, 90.5 and 64.3 shares issued and outstanding0.1 0.1 0.1 
Additional paid-in capital2.9 0 0 
Accumulated other comprehensive loss(63.9)(75.1)(78.8)
Retained earnings413.2 884.7 690.2 
Total stockholders’ equity352.3 809.7 611.5 
Total liabilities and stockholders’ equity$2,375.2 $2,987.9 $2,819.7 












See accompanying notes to unaudited condensed consolidated financial statements.
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GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
 Three Months EndedSix Months Ended
 July 31,
2021		August 1,
2020		July 31,
2021		August 1,
2020
Net sales$1,183.4 $942.0 $2,460.2 $1,963.0 
Cost of sales862.5 689.8 1,809.2 1,428.4 
Gross profit320.9 252.2 651.0 534.6 
Selling, general and administrative expenses378.9 348.2 749.2 734.7 
Asset impairments— 0.9 0.6 4.8 
Gain on sale of assets— (11.3)— (11.3)
Operating loss(58.0)(85.6)(98.8)(193.6)
Interest income(0.1)(0.4)(0.2)(1.3)
Interest expense0.6 7.9 25.4 15.5 
Loss from continuing operations before income taxes(58.5)(93.1)(124.0)(207.8)
Income tax expense3.1 17.9 4.4 68.3 
Net loss from continuing operations(61.6)(111.0)(128.4)(276.1)
Loss from discontinued operations, net of tax— (0.3)— (0.9)
Net loss$(61.6)$(111.3)$(128.4)$(277.0)
Basic loss per share:
Continuing operations$(0.85)$(1.71)$(1.85)$(4.26)
Discontinued operations— (0.01)— (0.01)
Basic loss per share$(0.85)$(1.71)$(1.85)$(4.28)
Diluted loss per share:
Continuing operations$(0.85)$(1.71)$(1.85)$(4.26)
Discontinued operations— (0.01)— (0.01)
Diluted loss per share$(0.85)$(1.71)$(1.85)$(4.28)
Weighted-average shares outstanding:
Basic72.6 65.0 69.3 64.7 
Diluted72.6 65.0 69.3 64.7 
 13 Weeks Ended26 Weeks Ended
 August 1,
2020		August 3,
2019		August 1,
2020		August 3,
2019
Net sales$942.0 $1,285.7 $1,963.0 $2,833.4 
Cost of sales689.8 886.6 1,428.4 1,963.1 
Gross profit252.2 399.1 534.6 870.3 
Selling, general and administrative expenses348.2 481.9 734.7 935.6 
Goodwill and asset impairments0.9 363.9 4.8 363.9 
Gain on sale of assets(11.3)0 (11.3)0 
Operating loss(85.6)(446.7)(193.6)(429.2)
Interest income(0.4)(2.6)(1.3)(7.9)
Interest expense7.9 9.6 15.5 22.6 
Loss from continuing operations before income taxes(93.1)(453.7)(207.8)(443.9)
Income tax expense (benefit)17.9 (40.1)68.3 (37.8)
Net loss from continuing operations(111.0)(413.6)(276.1)(406.1)
Loss from discontinued operations, net of tax(0.3)(1.7)(0.9)(2.4)
Net loss$(111.3)$(415.3)$(277.0)$(408.5)
Basic loss per share:
Continuing operations$(1.71)$(4.14)$(4.26)$(4.01)
Discontinued operations(0.01)(0.02)(0.01)(0.02)
Basic loss per share$(1.71)$(4.15)$(4.28)$(4.04)
Diluted loss per share:
Continuing operations$(1.71)$(4.14)$(4.26)$(4.01)
Discontinued operations(0.01)(0.02)(0.01)(0.02)
Diluted loss per share$(1.71)$(4.15)$(4.28)$(4.04)
Weighted-average shares outstanding:
Basic65.0 100.0 64.7 101.2 
Diluted65.0 100.0 64.7 101.2 




















See accompanying notes to unaudited condensed consolidated financial statements.
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GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOMELOSS
(in millions)
 Three Months EndedSix Months Ended
 July 31,
2021		August 1,
2020		July 31,
2021		August 1,
2020
Net loss$(61.6)$(111.3)$(128.4)$(277.0)
Other comprehensive (loss) income:
Foreign currency translation adjustment(9.1)27.0 (7.0)14.9 
Total comprehensive loss$(70.7)$(84.3)$(135.4)$(262.1)
 13 Weeks Ended26 Weeks Ended
 August 1,
2020		August 3,
2019		August 1,
2020		August 3,
2019
Net loss$(111.3)$(415.3)$(277.0)$(408.5)
Other comprehensive income (loss):
Foreign currency translation adjustment27.0 (6.9)14.9 (20.8)
Total comprehensive loss$(84.3)$(422.2)$(262.1)$(429.3)



















































See accompanying notes to unaudited condensed consolidated financial statements.
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GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions, except for per share data)
Class A
Common Stock		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
(Loss) Income		Retained
Earnings		Total
Stockholders'
Equity		 Class A
Common Stock		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Retained
Earnings		Total
Stockholders'
Equity
SharesAmount SharesTotal
Stockholders'
Equity
Balance at February 1, 202064.3 $0.1 $0 $(78.8)$690.2 $611.5 
Balance at January 30, 2021Balance at January 30, 202165.3 $0.1 $11.0 $(49.3)$474.9 $436.7 
Net lossNet loss— — — — (165.7)(165.7)Net loss— — — — (66.8)(66.8)
Issuance of common stock, net of costIssuance of common stock, net of cost3.5 — 551.7 — — 551.7 
Foreign currency translationForeign currency translation— — — (12.1)— (12.1)Foreign currency translation— — — 2.1 — 2.1 
Stock-based compensation expenseStock-based compensation expense— — 1.8 — — 1.8 Stock-based compensation expense— — 5.7 — — 5.7 
Settlement of stock-based awardsSettlement of stock-based awards0.3 — (0.5)— — (0.5)Settlement of stock-based awards0.5 — (49.9)— — (49.9)
Balance at May 2, 202064.6 $0.1 $1.3 $(90.9)$524.5 $435.0 
Balance at May 1, 2021Balance at May 1, 202169.3 $0.1 $518.5 $(47.2)$408.1 $879.5 
Net lossNet loss— — — — (111.3)(111.3)Net loss— — — — (61.6)(61.6)
Issuance of common stock, net of costIssuance of common stock, net of cost5.0 — 1,121.1 — — 1,121.1 
Foreign currency translationForeign currency translation— — — 27.0 — 27.0 Foreign currency translation— — — (9.1)— (9.1)
Stock-based compensation expenseStock-based compensation expense— — 2.1 — — 2.1 Stock-based compensation expense— — 8.8 — — 8.8 
Settlement of stock-based awardsSettlement of stock-based awards0.6 — (0.5)— — (0.5)Settlement of stock-based awards1.6 — (86.7)— — (86.7)
Balance at August 1, 202065.2 $0.1 $2.9 $(63.9)$413.2 $352.3 
Balance at July 31, 2021Balance at July 31, 202175.9 $0.1 $1,561.7 $(56.3)$346.5 $1,852.0 

Class A
Common Stock		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Retained
Earnings		Total
Stockholders'
Equity		 Class A
Common Stock		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Retained
Earnings		Total
Stockholders'
Equity
SharesAmount SharesTotal
Stockholders'
Equity
Balance at February 2, 2019102.0 $0.1 $27.7 $(54.3)$1,362.7 $1,336.2 
Net income— — — — 6.8 6.8 
Balance at February 1, 2020Balance at February 1, 202064.3 $0.1 $— $(78.8)$690.2 $611.5 
Net lossNet loss— — — — (165.7)(165.7)
Foreign currency translationForeign currency translation— — — (13.9)— (13.9)Foreign currency translation— — — (12.1)— (12.1)
Dividends declared, $0.38 per common share— — — — (38.7)(38.7)
Stock-based compensation expenseStock-based compensation expense— — 1.9 — — 1.9 Stock-based compensation expense— — 1.8 — — 1.8 
Settlement of stock-based awardsSettlement of stock-based awards0.3 — (0.6)— — (0.6)Settlement of stock-based awards0.3 — (0.5)— — (0.5)
Balance at May 4, 2019102.3 $0.1 $29.0 $(68.2)$1,330.8 $1,291.7 
Balance at May 2, 2020Balance at May 2, 202064.6 $0.1 $1.3 $(90.9)$524.5 $435.0 
Net lossNet loss— — — — (415.3)(415.3)Net loss— — — — (111.3)(111.3)
Foreign currency translationForeign currency translation— — — (6.9)— (6.9)Foreign currency translation— — — 27.0 — 27.0 
Stock-based compensation expenseStock-based compensation expense— — 3.3 — — 3.3 Stock-based compensation expense— — 2.1 — — 2.1 
Repurchase of common shares(12.0)— (32.1)— (30.8)(62.9)
Settlement of stock-based awardsSettlement of stock-based awards0.2 — (0.2)— — (0.2)Settlement of stock-based awards0.6 — (0.5)— — (0.5)
Balance at August 3, 201990.5 $0.1 $0 $(75.1)$884.7 $809.7 
Balance at August 1, 2020Balance at August 1, 202065.2 $0.1 $2.9 $(63.9)$413.2 $352.3 














See accompanying notes to unaudited condensed consolidated financial statements.
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GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 Six Months Ended
July 31,
2021		August 1,
2020
Cash flows from operating activities:
Net loss$(128.4)$(277.0)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization (including amounts in cost of sales)36.3 41.7 
Loss (gain) on retirement of debt18.2 (1.5)
Asset impairments0.6 4.8 
Stock-based compensation expense14.5 3.9 
Deferred income taxes— 45.4 
Loss (gain) on disposal of property and equipment, net0.5 (9.6)
Other, net(0.6)1.3 
Changes in operating assets and liabilities:
Receivables, net36.2 60.5 
Merchandise inventories1.2 394.2 
Prepaid expenses and other current assets(4.0)1.7 
Prepaid income taxes and income taxes payable(13.8)69.8 
Accounts payable and accrued liabilities25.2 (193.7)
Operating lease right-of-use assets and lease liabilities(16.1)2.8 
Changes in other long-term liabilities(0.1)(0.8)
Net cash flows (used in) provided by operating activities(30.3)143.5 
Cash flows from investing activities:
Purchase of property and equipment(28.2)(17.5)
Proceeds from sale of property and equipment— 51.8 
Other(0.1)1.7 
Net cash flows (used in) provided by investing activities(28.3)36.0 
Cash flows from financing activities:
Proceeds from issuance of common stock, net of costs1,672.8 — 
Proceeds from French term loans— 23.6 
Borrowings from the revolver— 150.0 
Repayments of revolver borrowings(25.0)(115.0)
Payments of senior notes(307.4)(5.3)
Settlement of stock-based awards(136.6)(1.0)
Other(0.1)(0.3)
Net cash flows provided by financing activities1,203.7 52.0 
Exchange rate effect on cash, cash equivalents and restricted cash(4.5)13.6 
Increase in cash, cash equivalents and restricted cash1,140.6 245.1 
Cash, cash equivalents and restricted cash at beginning of period635.0 513.5 
Cash, cash equivalents and restricted cash at end of period$1,775.6 $758.6 
 26 Weeks Ended
 August 1,
2020		August 3,
2019
Cash flows from operating activities:
Net loss$(277.0)$(408.5)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization (including amounts in cost of sales)41.7 46.2 
Goodwill and asset impairments4.8 363.9 
Stock-based compensation expense3.9 5.2 
Deferred income taxes45.4 (11.8)
(Gain) loss on disposal of property and equipment, net(9.6)0.9 
Other(0.2)3.7 
Changes in operating assets and liabilities:
Receivables, net60.5 8.5 
Merchandise inventories394.2 270.5 
Prepaid expenses and other current assets1.7 (7.4)
Prepaid income taxes and income taxes payable69.8 (76.5)
Accounts payable and accrued liabilities(193.7)(839.4)
Operating lease right-of-use assets and lease liabilities2.8 (2.2)
Changes in other long-term liabilities(0.8)0.2 
Net cash flows provided by (used in) operating activities143.5 (646.7)
Cash flows from investing activities:
Purchase of property and equipment(17.5)(41.2)
Proceeds from sale of property and equipment51.8 0 
Other1.7 (1.0)
Net cash flows provided by (used in) investing activities36.0 (42.2)
Cash flows from financing activities:
Repurchase of common shares0 (62.9)
Proceeds from French term loans23.6 0 
Dividends paid(0.3)(40.5)
Borrowings from the revolver150.0 0 
Repayments of revolver borrowings(115.0)0 
Repayments of senior notes(5.3)(404.5)
Settlement of stock-based awards(1.0)(0.8)
Net cash flows provided by (used in) financing activities52.0 (508.7)
Exchange rate effect on cash and cash equivalents and restricted cash13.6 (5.1)
Increase in cash held-for-sale0 (0.1)
Increase (decrease) in cash and cash equivalents and restricted cash245.1 (1,202.8)
Cash and cash equivalents and restricted cash at beginning of period513.5 1,640.5 
Cash and cash equivalents and restricted cash at end of period$758.6 $437.7 





See accompanying notes to unaudited condensed consolidated financial statements.
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GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.    General Information
The Company
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is a global, multichannel video game, consumer electronicsoffers games, entertainment products and collectibles retailer. GameStop operates over 5,100 stores across 10 countries. GameStop's consumer product network also includes www.gamestop.comtechnology through its e-commerce properties and Game Informer® magazine, the world's leading print and digital video game publication.stores.
GameStopThe Company operates its business in 4 geographic segments: United States, Canada, Australia and Europe. The information contained in these unaudited condensed financial statements refers to continuing operations unless otherwise noted.
Basis of Presentation and Consolidation
The unaudited condensed consolidated financial statements include the Company'sour accounts and the accounts of itsour wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal, recurring adjustments) which are, in the Company'sour opinion, necessary for a fair presentation of the information as of and for the periods presented. These unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all disclosures required under GAAP for complete consolidated financial statements.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company'sour annual report on Form 10-K for the 52 weeks ended February 1, 2020,January 30, 2021, as filed with the Securities and Exchange Commission ("SEC") on March 27, 2020,23, 2021 (the “2019“2020 Annual Report on Form 10-K”). Due to the seasonal nature of our business, the results of operations for the six months ended July 31, 2021 are not indicative of the results to be expected for the 52 weeks ending January 29, 2022. Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January. Each of our fiscal years ending January 29, 2022 and January 30, 2021 consist of 52 weeks. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods. The discussion and analysis of our results of operations refers to continuing operations unless otherwise noted. Our business, like that of many retailers, is seasonal, with the major portion of the net sales realized during the fourth quarter, which includes the holiday selling season.
UseofEstimates
The preparation of financial statements in conformity with GAAPaccounting principles generally accepted in the United States of America (“GAAP”) requires the Companyus to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, the Company haswe have made itsour best estimates and judgments of certain amounts included in the financial statements, and changesgiving due consideration to materiality. Changes in the estimates and assumptions that we have used by the Company could have a significant impact on itsour financial results. Actual results could differ from those estimates. Due to the seasonal nature of the Company's business, the results of operations for the 26 weeks ended August 1, 2020 are not indicative of the results to be expected for the 52 weeks ending January 30, 2021 ("fiscal 2020").
Reclassifications
The Company hasWe have made certain classifications in itsour consolidated statements of cash flows in order to conform to the current year presentation. The provision for inventory reservesIn our consolidated balance sheets, restricted cash of $21.5$11.0 million for the 26 weeks endedas of August 3, 20191, 2020 has been reclassified from prepaid expenses and other current assets to changes in merchandise inventories. Certain changes in customer liabilities, primarily associated with loyalty point redemptions and gift card breakage, of $11.7 million for the 26 weeks ended August 3, 2019 has also been reclassified from other to changes in accounts payable and accrued liabilities.
In the Company's consolidated statements of operations, depreciation and amortization of $22.6 million and $45.7 million for the 13 and 26 weeks ended August 3, 2019, respectively, have been reclassified to selling, general and administrative expensesrestricted cash to conform to the current year presentation. Additionally, goodwill impairmentsrestricted cash of $363.9$12.5 million for both the 13 and 26 weeks endedas of August 3, 2019 have1, 2020 has been reclassified from other noncurrent assets to goodwill and asset impairmentslong-term restricted cash to conform to the current year presentation.
In our consolidated statements of cash flows, gain on retirement of debt of $1.5 million for the six months ended August 1, 2020 was reclassified from other to loss (gain) on retirement of debt.
Significant Accounting Policies
There have been no material changes to the Company'sour significant accounting policies included in Note 1, "Nature of Operations and Summary of Significant Accounting Policies," within its 2019the 2020 Annual Report on Form 10-K.
Restricted Cash
Restricted cash of $55.2 million, $23.5 million $13.7 million and $14.1$126.5 million as of July 31, 2021, August 1, 2020 August 3, 2019 and February 1, 2020,January 30, 2021, respectively, consists primarily of bank deposits serving as collateralthat collateralize our obligations to support landlordvendors and vendor obligations of the Company's foreign subsidiaries and is included in prepaid and other current assets and other noncurrent assets in its unaudited condensed consolidated balance sheets.landlords.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table provides a reconciliation of cash, and cash equivalents and restricted cash in the condensed consolidated balance sheets to total cash, and cash equivalents and restricted cash in the condensed consolidated statements of cash flows (in millions):
August 1,
2020		August 3,
2019		February 1,
2020
Cash and cash equivalents$735.1 $424.0 $499.4 
Restricted cash (included in prepaid expenses and other current assets)11.0 0.4 0.3 
Restricted cash (included in other noncurrent assets)12.5 13.3 13.8 
Total cash and cash equivalents and restricted cash in the statements of cash flows$758.6 $437.7 $513.5 
July 31,
2021		August 1,
2020		January 30,
2021
Cash and cash equivalents$1,720.4 $735.1 $508.5 
Restricted cash36.7 11.0 110.0 
Long-term restricted cash18.5 12.5 16.5 
Total cash, cash equivalents and restricted cash in the statements of cash flows$1,775.6 $758.6 $635.0 
Assets and Liabilities Held-for-Sale
The Company'sOur corporate aircraft was classified as assets held-for-sale as of February 1,May 2, 2020 whichand had an estimated fair value, less costs to sell, of $11.8$9.1 million. The CompanyWe recognized impairment charges of $0.5 million and $3.2 million on the corporate aircraft during the 13three and 26 weekssix months ended August 1, 2020, respectively, which were partially attributable to recent economic impacts associated with the COVID-19 pandemic. On June 5, 2020, we sold the Company completed the sale of its corporate aircraft withand received net cash proceeds from the sale totaling $8.6 million, net of costs to sell. NaNNo gain or loss onwas recognized upon the sale ofin the aircraft was recognized.
The assets and liabilities classified as held-for-sale as of August 3, 2019 related to the Company's previously owned Simply Mac business, which was sold to Cool Holdings, Inc. during the third fiscalsecond quarter of 2019. The major classes of assets and liabilities held-for-sale were as follows (in millions):
August 3,
2019
Assets:
Cash and cash equivalents$0.1
Receivables, net1.8
Merchandise inventories, net15.4
Prepaid expenses and other current assets0.6
Property and equipment, net0.8
Operating lease right-of-use assets9.0
Other assets1.4
Total assets held-for-sale$29.1
Liabilities:
Accounts payable$4.0
Accrued and other liabilities1.1
Operating lease liabilities9.4
Total liabilities held-for-sale$14.5
2020.
Property and Equipment, Net
Accumulated depreciation related to the Company'sour property and equipment totaled $1,113.7 million, $1,176.5 million $1,255.3 million and $1,190.1$1,117.7 million as of July 31, 2021, August 1, 2020 August 3, 2019 and February 1, 2020,January 30, 2021, respectively.
The CompanyWe periodically reviews itsreview our property and equipment when events or changes in circumstances indicate that its carrying amounts may not be recoverable or its depreciation or amortization periods should be accelerated. The Company assessesWe assess recoverability based on several factors, including itsour intention with respect to itsour stores and those stores’ projected undiscounted cash flows. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its fair value, determined based on an estimate of discounted future cash flows.flows or readily available market information for similar assets. No impairment losses were recorded during the six months ended July 31, 2021. Impairment losses were recorded totaling $0.3 million and $1.0 million during the 13three and 26 weekssix months ended August 1, 2020, respectively. NaN impairment losses were recorded during
At-the-Market Equity Offering
During the 13first quarter of 2021, we sold 3,500,000 shares of our common stock under our "at-the-market" equity offering program (the "Q1 ATM"). We generated $556.7 million in gross proceeds from sales under the Q1 ATM and 26 weeks ended August 3, 2019.paid fees to the sales agent of $5.0 million. Additionally, we incurred $0.2 million in other administrative fees in connection with the Q1 ATM, which are included in selling, general and administration expenses on the consolidated statements of operations.
During the second quarter of 2021, we sold 5,000,000 shares of our common stock under our "at-the-market" equity offering program (the "Q2 ATM"). We generated $1.126 billion in gross proceeds from sales under the Q2 ATM and paid fees to the sales agent of $5.1 million. Additionally, we incurred $0.2 million in other administrative fees in connection with the Q2 ATM, which are included in selling, general and administration expenses on the consolidated statements of operations.
We have used, and intend to continue to use, the $1.67 billion in aggregate net proceeds generated from sales under the Q1 ATM and Q2 ATM for working capital and general corporate purposes, including repayment of indebtedness, funding our transformation and growth initiatives and product category expansion efforts, capital expenditures and the satisfaction of our tax withholding obligations upon the vesting of shares of restricted stock held by our executive officers and other employees.
Discontinued Operations and Dispositions
DuringThe historic results of our Spring Mobile business, sold during the fourth quarter of fiscal 2018, the Company divested of its Spring Mobile business. The historic results of Spring Mobile are presented as discontinued operations, which primarily consist of residual wind-down costs for all periods presented. The net
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
loss from discontinued operations for the 13 weeksthree months ended August 1, 2020 and August 3, 2019 consisted of $0.4 million and $2.2$0.1 million in selling, general and administrative expenses respectively and $0.1 million and $0.5 million in income tax benefit, respectively. The net loss from discontinued operations for the 26 weekssix months ended August 1, 2020 and August 3, 2019 consisted of $1.2 million and $3.0$0.3 million in selling, general and administrative expenses respectively and $0.3 million and $0.6 million in income tax benefit, respectively.
Adoption of New Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was further updated and clarified by the FASB through the issuance of additional related ASUs. This ASU requires financial assets measured at amortized cost to be presented at the net amount to be collected with the recognition of an allowance for credit losses expected to be incurred over an asset's lifetime based on relevant information about past events, current conditions and reasonable and supportable forecasts. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this new standard, effective February 2, 2020, using the modified-retrospective approach. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. There were 0 discontinued operations during 2021.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard is intended to simplify the accounting and disclosure requirements for income taxes by eliminating various exceptions in accounting for income taxes as well as clarifying and amending existing guidance to improve consistency in application of ASC
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740. The provisions of ASU 2019-12 are effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Companyadoption of this standard is currently evaluating thenot expected to result in a material impact that ASU 2019-12 will have on itsour consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides practical expedients for contract modifications with the transition from reference rates, such as LIBOR, that are expected to be discontinued. This guidance is applicable for the Company'sour revolving line of credit, which uses LIBOR as a reference rate. The provisions of ASU 2020-04 are effective as of March 12, 2020 and may be adopted prospectively through December 31, 2022. The Company isWe are currently evaluating the impact that ASU 2020-04 will have on itsour consolidated financial statements.
2.    COVID-19 Impacts
The near-term macroeconomic conditions continue to be adversely impacted by the emergence of a novel coronavirus, identified as COVID-19, which was declared a global pandemic by the World Health Organization in March 2020. In efforts to mitigate the continued spread of the virus, numerous governments in geographies where the Company operates have imposed quarantines, stay-at-home orders, travel restrictions and other similar measures in attempts to limit physical human interaction, often referred to as social distancing. To comply with these measures, the CompanyThroughout 2020, we temporarily closed stores in Europe, Canada and New Zealand. Inor limited store operations at various times across our 4 operating segments. During the United States, all storefronts were temporarily closed to customers, however, the Company continued to process orders by offering curbside pick-up, ship from store and e-commerce delivery options in manyfirst quarter of its stores. These2021, temporary store closures beganwere limited to certain jurisdictions in late March 2020Europe and by the end of fiscal June 2020, 98% of the Company's stores globally were open to the public following the implementation of the highest level of health and safety protocols recommended by the federal and local health and governmental authorities. GameStop's store locations in Australia remained opened to the public during the 26 weeks ended August 1, 2020 and were not negatively impacted during this period by the COVID-19 restrictions as the Company's other segments and New Zealand. Subsequent toCanada. During the second quarter of fiscal 2020, approximately 15%2021, most of the Company'sour stores in Australia were temporarily closedall jurisdictions returned to normal operations. However, with the resurgence of COVID-19 cases due to an outbreak of COVID-19.
The Company has followed the highest level of health and safety protocols recommended by the federal and local health and governmental authorities and the substantial majority of the Company's stores across the various geographies where it operates were re-openedvariants, we experienced some temporary closures in our Australian segment prior to the public for the latter portionend of the 13 weeks ended August 1, 2020. In addition, many of the Company's stores in the United States continued to offer curbside pick-up, ship from store and e-commerce delivery options during the second quarter of fiscal 2020 while they were open2021. As certain of our stores experienced temporary closures during the six months ended July 31, 2021, some of our stores offered and continue to the public.
Impact on Operating Results and Asset Recoverabilityoffer curbside pick-up. We remain vigilant in our compliance with COVID-19 regulations across our operating regions.
While the gaming industry has not been as severely impacted by the COVID-19 pandemic as certain other consumer businesses, store closures during the stay-at-home orders havein certain countries continue to adversely impacted the Company'simpact our results of operations during the 13 and 26 weekssix months ended August 1, 2020. As a result, the Company has taken proactive measures to align inventory purchases with demand, reduce discretionary spending and institute temporary pay reductions to partially offset the impactJuly 31, 2021. In light of store closures.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During the 26 weeks ended August 1, 2020, the Company incurred $21.4 million to mitigate the impact of the COVID-19 pandemic including incremental wage payments to hourly associates to help offset lost wages due to store closures, enhanced cleaning measures and expanded use of personal protective equipment at its stores, shared service centers and distribution centers across all geographies where the Company operates.
The aggregation of these events caused the Company to reassess potential impairments of long-lived assets, primarily consisting of store-level property and equipment and right-of-use assets under existing operating leases. As a result of this asset impairment analysis, during the 13 and 26 weeks ended August 1, 2020 the Company recognized impairment charges of $0.4 million and $1.6 million, respectively. In addition, during the 13 and 26 weeks ended August 1, 2020, the Company recognized impairment charges of $0.5 million and $3.2 million, respectively, for its corporate aircraft, which were partially attributable to the current economic impacts associated with the COVID-19 pandemic. The corporate aircraft was sold during the second quarter of fiscal 2020 for $8.6 million, net of costs to sell. See Note 1, "General Information" for further details.
During the first and second quarters of fiscal 2020 the Company continued to assess the likelihood of realizing the benefits of its deferred tax assets. The Company estimates its deferred tax assets using several factors, including the weight of available evidence, which takes into consideration cumulative book losses recognized and projections of future taxable income in certain jurisdictions. While the Company's view of the longer-term operating outlook has not been significantly impacted by COVID-19, its ability to recover these deferred tax assets depends on several factors, including the Company's short and long-term results of operations. As a result of this analysis, there remains a valuation allowance primarily associated with U.S. deferred tax assets of $53.0 million as of August 1, 2020. See Note 10, “Income Taxes" for further information.
The Company also evaluated its existing short-term assets, particularly accounts receivable and inventory.
Accounts receivable are mainly comprised of bankcard receivables and vendor allowances. Given the nature of these receivables and the credit worthiness of the applicable payees, the COVID-19 pandemic did not significantly impact the estimates of allowances for doubtful accounts.
Merchandise inventories are carried at the lower of cost or market generally using the average cost method. The Company is required to record valuation adjustments to inventory to reflect potential obsolescence or over-valuation as a result of cost exceeding market. In valuing inventory, the Company considers quantities on hand, recent sales, potential price protections, returns to vendors and other factors. Given the nature of the Company's products and the temporary store closures between March and June 2020, the COVID-19 pandemic did not significantly impact its estimates of inventory valuation.
Liquidity and Other Impacts
As of August 1, 2020, the Company had total cash on hand of $735.1 million and an additional $28.4 million of available borrowing capacity under its $420 million revolving credit facility, which had $35.0 million of outstanding borrowings as of August 1, 2020. The Company's total cash on hand includes $43.2 million proceeds, net of costs to sell and other deductions, from the sale and leaseback of its corporate headquarters, ancillary office space and a nearby refurbishment center in Grapevine, Texas and $8.6 million net proceeds from the sale of the Company's corporate aircraft. See Note 1, "General Information," and Note 5, "Leases," for further information on the sale of the corporate aircraft and the sale and leaseback transactions. As mentioned above, the Company has taken actions to align expenses and inventory levels given the impacts of the current operating environment and has projected itour strengthened balance sheet, we project that we will have adequate liquidity for the next 12 months and the foreseeable future to maintain normal operations. Additionally, during
During the second quarter of fiscal 2020,2021, we continued to evaluate the Company completed an exchange offer for its unsecured senior notes due in March 2021 resulting in the replacementimpact of 52% of such notes for newly issued secured senior notes due in March 2023. See Note 6, "Debt," for further details on the exchange offer and related impacts to scheduled debt maturities.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 pandemic on our assets, including accounts receivable, inventory, and options to defer the Company's share of Social Security payroll taxes. The Company qualified for the deferral of payroll and other tax payments and, as a result, it has deferred, and continues to defer payroll taxes and other tax payments through the end of the calendar year 2020. The payment of these deferred amounts are required to be made in 2021 and 2022 calendar years. These deferrals are included in accrued liabilities and other current liabilities within the Company's unaudited condensed consolidated balance sheets.long-lived assets. In addition, during the second quarter of fiscal 2020,2021, we continued to assess the Company's French subsidiary obtained €20.0 millionlikelihood of unsecured term loans, 90%realizing the benefits of which is guaranteed by the French government pursuantour deferred tax assets. As a result of our assessment, we continue to maintain a state guaranteed loan program instituted in connection with the COVID-19 pandemic. See Note 6, "Debt" for further information.
During the 13 and 26 weeks ended August 1, 2020, the Company received $9.1 millionfull valuation allowance on all of COVID-19-related rent concessions comprised of rent abatements and rent deferrals. The Company applied lease modification guidance to any concession arrangement that extended the term of the lease and substantially altered future cash flows. The Company elected, as permitted by the guidance issued by the FASB during the COVID-19 pandemic, to not use lease modification accounting for all rent concessions including any rent abatements related to leases not subject to an extension of the original terms. For these leases,
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which represented most of the leases subject to COVID-19-related rent concessions, the Company reduced rent expense in the later of the month in which the landlord issued the rent concession or the month for which the rent concession related. For rent concessions including a deferral of the lease payment, the liability for these rent amounts will remain on the balance sheet until paid.our net deferred tax assets.
The COVID-19 pandemic remains an evolving situation and its future impact on the Company'sall areas of our business operating results, cash flows and financial conditions will depend on the geographies impacted by the virus, the ongoing economic effect of the pandemic, the additional economic stimulus programs introduced by governments, and the timing of the post-pandemic economic recovery. Even as the Company continues to comply with all governmental health and safety requirements for its associates and customers while resuming and maintaining full operations, the persistence of the COVID-19 pandemic may require the Company to temporarily close stores again in future periods or introduce modified operating schedules and may impact customer behaviors, including a potential reduction in consumer discretionary spending. These developments could increase asset recovery and valuation risks. Further, the uncertainties in the global economy could impact the financial viability of the Company's suppliers, which may interrupt the Company's supply chain and require other changes to operations. In light of the foregoing, the extent and duration of theremain unknown. The COVID-19 pandemic and the related responses of governments, customers, suppliers and other third parties may materially adversely impact the Company'sour business, financial condition, results of operations and cash flows.
3.    Revenue
At the end of fiscal 2019, the Company revised the categories of its similar products, as presented below, to better align with management's view of the business. Prior periods have been reclassified to conform to the current period presentation. Net sales by significant product category for the periods indicated is as follows (in millions):
13 Weeks Ended26 Weeks Ended
 August 1, 2020August 3, 2019August 1, 2020August 3, 2019
Hardware and accessories (1)
$441.6 $554.9 $954.7 $1,211.4 
Software (2)
386.5 558.3 803.5 1,291.4 
Collectibles113.9 172.5 204.8 330.6 
Total$942.0 $1,285.7 $1,963.0 $2,833.4 
Three Months EndedSix Months Ended
 July 31,
2021		August 1,
2020		July 31,
2021		August 1,
2020
Hardware and accessories (1)
$609.6 $441.6 $1,313.1 $954.7 
Software (2)
396.6 386.5 794.5 803.5 
Collectibles177.2 113.9 352.6 204.8 
Total$1,183.4 $942.0 $2,460.2 $1,963.0 

(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, and the operations of Simply Mac stores, which were sold in September 2019.electronics.
(2)    Includes sales of new and pre-owned video game software, digital software and PC entertainment software.
See Note 9, "Segment Information," for net sales by geographic location.
Performance Obligations
The Company hasWe have arrangements with customers where itsour performance obligations are satisfied over time, which primarily relate to extended warranties and itsour Game Informer® magazine. Revenues do not include sales tax or other taxes collected from customers. The Company expectsWe expect to recognize revenue in future periods for remaining performance obligations it haswe have associated with unredeemed gift cards, trade-in credits, reservation deposits and itsour PowerUp Rewards loyalty program (collectively, "unredeemed customer liabilities"), extended warranties and subscriptions to itsour Game Informer® magazine. These performance obligations are included in accrued liabilities and other current liabilities in our consolidated balance sheets.
Performance obligations associated with unredeemed customer liabilities are primarily satisfied at the time customers redeem gift cards, trade-in credits, customer deposits or loyalty program points for products offered by the Company.that we offer. Unredeemed customer
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liabilities are generally redeemed within one year of issuance. As of July 31, 2021 and August 1, 2020, and August 3, 2019, the Company'sour unredeemed customer liabilities totaled $213.0$209.0 million and $250.6$213.0 million, respectively.
The Company offersWe offer extended warranties on certain new and pre-owned video game products with terms generally ranging from 12 to 24 months, depending on the product. Revenues for extended warranties sold are recognized on a straight-line basis over the life of the contract. As of July 31, 2021 and August 1, 2020, and August 3, 2019, the Company'sour deferred revenue liability related to extended warranties totaled $50.6$69.5 million and $63.3$50.6 million, respectively.
Performance obligations associated with subscriptions to Game Informer® magazine are satisfied when monthly magazines are delivered in print form or made available in digital format. The significant majority of customer subscriptions are for 12 monthly issues. As of July 31, 2021 and August 1, 2020, and August 3, 2019, the Companywe had deferred revenue of $29.1$39.6 million and $40.6$29.1 million, respectively, associated with our Game Informer® magazine.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Significant Judgments and Estimates
The Company accruesWe accrue PowerUp Rewards loyalty points at the estimated retail price per point, net of estimated breakage, which can be redeemed by loyalty program members for products offered by the Company.we offer. The estimated retail price per point is based on the actual historical retail prices of product(s) purchased through the redemption of loyalty points. The Company estimatesWe estimate breakage of loyalty points and unredeemed gift cards based on historical redemption rates.
Contract Balances
The Company'sOur contract liabilities primarily consist of unredeemed customer liabilities and deferred revenues associated with gift cards, extended warranties and subscriptions to Game Informer® magazine. The opening balance, current period changes and ending balance of the Company'sour contract liabilities are as follows (in millions):
August 1, 2020August 3, 2019July 31,
2021		August 1,
2020
Contract liability beginning balanceContract liability beginning balance$339.2 $376.9 Contract liability beginning balance$348.2 $339.2 
Increase to contract liabilities (1)
Increase to contract liabilities (1)
354.1 412.9 
Increase to contract liabilities (1)
401.2 354.1 
Decrease to contract liabilities (2)
Decrease to contract liabilities (2)
(402.0)(432.6)
Decrease to contract liabilities (2)
(430.3)(402.0)
Other adjustments (3)
Other adjustments (3)
1.4 (2.7)
Other adjustments (3)
(1.0)1.4 
Contract liability ending balanceContract liability ending balance$292.7 $354.5 Contract liability ending balance$318.1 $292.7 

(1)    Includes issuances of gift cards, trade-in credits and loyalty points, new reservation deposits, new subscriptions to Game Informer® and extended warranties sold.
(2)    Includes redemptions of gift cards, trade-in credits, loyalty points and customer deposits as well as revenues recognized for Game Informer® and extended warranties. During the 26 weekssix months ended July 31, 2021, there were $34.9 million of gift cards redeemed that were outstanding as of January 30, 2021. During the six months ended August 1, 2020, there were $30.4 million of gift cards redeemed that were outstanding as of February 1, 2020. During the 26 weeks ended August 3, 2019, there were $39.8 million of gift cards redeemed that were outstanding as of February 2, 2019.
(3)    Primarily includes foreign currency translation adjustments.
4.    Fair Value Measurements and Financial Instruments
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Applicable accounting standards require disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting the Company'sour assumptions about pricing by market participants.
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
Assets and liabilities that are measured at fair value on a recurring basis include the Company'sour foreign currency contracts, Company-owned life insurance policies with a cash surrender value, and certain nonqualified deferred compensation liabilities.
The Company values itsWe value our foreign currency contracts, life insurance policies with cash surrender values and certain nonqualified deferred compensation liabilities based on Level 2 inputs using quotations provided by major market news services, such as Bloomberg, and industry-standard models that consider various assumptions, including quoted forward prices, time value, volatility factors, and contractual prices for the underlying instruments, as well as other relevant economic measures, all of which are observable in active markets. When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.
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The Company'sin active markets. When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.
Our assets and liabilities measured at fair value on a recurring basis as of July 31, 2021, August 1, 2020 August 3, 2019 and February 1, 2020,January 30, 2021, utilize Level 2 inputs and include the following (in millions):
August 1, 2020August 3, 2019February 1, 2020
Assets
Foreign currency contracts(1)
$2.9 $3.2 $1.4 
Company-owned life insurance(2)
3.0 16.3 4.1 
Total assets$5.9 $19.5 $5.5 
Liabilities
Foreign currency contracts(3)
$8.4 $1.6 $0.3 
Nonqualified deferred compensation(3)
1.0 1.2 1.0 
Total liabilities$9.4 $2.8 $1.3 
July 31,
2021		August 1,
2020		January 30, 2021
Assets
Foreign currency contracts(1)
$2.2 $2.9 $2.5 
Company-owned life insurance(2)
2.8 3.0 2.7 
Total assets$5.0 $5.9 $5.2 
Liabilities
Foreign currency contracts(3)
$2.4 $8.4 $2.4 
Nonqualified deferred compensation(3)
0.6 1.0 0.6 
Total liabilities$3.0 $9.4 $3.0 

(1)     Recognized in prepaid expenses and other current assets in the Company'sour unaudited condensed consolidated balance sheets.
(2)    Recognized in other non-current assets in the Company'sour unaudited condensed consolidated balance sheets.
(3)    Recognized in accrued liabilities and other current liabilities in the Company'sour unaudited condensed consolidated balance sheets.
The Company usesWe use forward exchange contracts to manage currency risk primarily related to intercompany loans and third party accounts payable denominated in non-functional currencies. These foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the re-measurement of related intercompany loansbalances denominated in foreign currencies. The total gross notional value of derivatives related to the Company'sour foreign currency contracts was $199.0 million, $246.6 million $223.7 million and $144.6$206.9 million as of July 31, 2021, August 1, 2020 August 3, 2019 and February 1, 2020,January 30, 2021, respectively.
Activity related to the trading of derivative instruments and the offsetting impact of related intercompany loansbalances denominated in foreign currencies recognized in selling, general and administrative expense is as follows (in millions):
 Three Months EndedSix Months Ended
 July 31,
2021		August 1,
2020		July 31,
2021		August 1,
2020
(Losses) gains on the changes in fair value of derivative instruments$(0.9)$(7.6)$1.6 $(5.2)
Gains (losses) on the re-measurement of intercompany loans and third-party accounts payable denominated in foreign currencies1.3 7.3 (0.5)5.2 
Net gains (losses)$0.4 $(0.3)$1.1 $— 
 13 Weeks Ended26 Weeks Ended
 August 1,
2020		August 3,
2019		August 1,
2020		August 3,
2019
(Losses) gains on the changes in fair value of derivative instruments$(7.6)$0.4 $(5.2)$2.8 
Gains (losses) on the re-measurement of related intercompany loans denominated in foreign currencies7.3 (0.4)5.2 (2.8)
Net losses$(0.3)$0 $0 $0 
The Company doesWe do not use derivative financial instruments for trading or speculative purposes. The Company isWe are exposed to counterparty credit risk on all of itsour derivative financial instruments and cash equivalent investments. The Company managesWe manage counterparty risk according to the guidelines and controls established under our comprehensive risk management and investment policies. The CompanyWe continuously monitors itsmonitor our counterparty credit risk and utilizesutilize a number of different counterparties to minimize itsour exposure to potential defaults. The Company doesWe are not requirerequired to post collateral under derivative or investment agreements.
Assets that are Measured at Fair Value on a Non-recurring Basis
Assets that are measured at fair value on a non-recurring basis relate primarily to property and equipment, operating lease right-of-use ("ROU") assets and other intangible assets, which are remeasured when the estimated fair value is below its carrying value. For these assets, the Company doeswe do not periodically adjust carrying value to fair value; rather, when it determineswe determine that impairment has occurred, the carrying value of the asset is reduced to its fair value.
During the 13six months ended July 31, 2021, we recognized impairment charges totaling $0.6 million associated with store-level ROU assets, to reflect their fair values. During the three and 26 weekssix months ended August 1, 2020, the Companywe recognized impairment charges totalingof $0.4 million and $1.6 million, respectively, associated with store-level ROU and property and equipment assets to reflect their fair values of 0. For further details regarding these store-level impairments, see Note 2, "COVID-19 Impacts."values. During the 13three and 26 weekssix months ended August 1, 2020, the Companywe also recognized impairment charges of $0.5 million and $3.2 million, respectively, related to itsour corporate aircraft to reflect its fair value of $8.6 million prior to the sale of the aircraft on June 5, 2020.
Other Fair Value Disclosures
The carrying values of the Company's cash equivalents, receivables, net, accounts payable and notes payable approximate their fair values due to their short-term maturities.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Fair Value Disclosures
The carrying values of our cash equivalents, net receivables, accounts payable and short-term borrowings approximate their fair values due to their short-term maturities.
As of August 1, 2020 the Company's unsecured 6.75% senior notesJuly 31, 2021, our French term loans due in 20212026 had a net carrying value of $197.8$47.5 million and a fair value of $172.3 million, and its secured 10.00% senior notes due in 2023 had a net carrying value of $215.9 million and a fair value of $194.2$45.9 million. The fair values of the Company's senior notesour French term loans were determinedestimated based on observable inputs (Level 2), including quoted market prices obtained through an external pricing sourcea model that discounted future principal and interest payments at interest rates available to us at the end of the period for similar debt of the same maturity, which derives its price valuations from daily marketplace transactions, adjusted to reflectis a Level 2 input as defined by the spreads of benchmark bonds, credit risk and certain other variables.fair value hierarchy.
5.    Leases
The Company conductsWe conduct the substantial majority of itsour business with leased real estate properties, including retail stores, warehousefulfillment and distribution facilities and office space. The CompanyWe also leaseslease certain equipment and vehicles. These are generally leased under noncancelablenoncancellable agreements and include various renewal options for additional periods. These agreements generally provide for minimum, and in some cases, percentage rentals, and require the Companyus to pay insurance, taxes and other maintenance costs. Percentage rentals are based on sales performance in excess of specified minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated. All of the Company'sour lease agreements are classified as operating leases.
Effective February 3, 2019, the Company adopted ASC 842, Leases. Under ASC 842, fixed payments associated with its
Rent expense under operating leases are included in operating lease right-of-use ("ROU") assets and both current and noncurrent operating lease liabilities on the balance sheet. The Company determines if an arrangement is considered a lease at inception. ROU assets are recognized on the commencement date based on the present value of future minimum lease payments over the lease term, including reasonably certain renewal options. As the rate implicit in the lease is not readily determinable for most leases, the Company utilizes its incremental borrowing rate ("IBR") to determine the present value of future payments. The incremental borrowing rate represents a significant judgment that is based on an analysis of the Company's credit rating, country risk, corporate bond yields, the effect of collateralization,was as well as comparison to its borrowing rates. For real estate leases, the Company does not separate the components of a contract, thus its future payments include minimum rent payments and fixed executory costs. For non-real estate leases, future payments include only fixed minimum rent payments. The Company records the amortization of ROU assets and the accretion of lease liabilities as a singlefollows (in millions):
Three Months EndedSix Months Ended
July 31,
2021		August 1,
2020		July 31,
2021		August 1,
2020
Operating lease cost$73.8 $78.9 $148.7 $160.3 
Variable lease cost (1)
16.2 19.2 33.7 40.1 
Total rent expense$90.0 $98.1 $182.4 $200.4 
(1)    Variable lease cost on a straight-line basis over the lease term, whichprimarily includes option terms the Company is reasonably certain to exercise. The Company recognizes cash or lease incentives as a reduction to the ROU asset. ROU assets are assessed for impairment in accordance with the Company's long-lived asset impairment policy, which is performed periodically or when events or changes in circumstances indicate that the carrying amount may not be recoverable.percentage rentals and variable executory costs.

In July of 2020, the Companywe sold, in separate unrelated transactions, to unaffiliated third parties: i) itsour corporate headquarters and ancillary office space in Grapevine, Texas for $28.5 million, net of costs to sell and ii) a nearby refurbishment center for $15.2 million, net of costs to sell. The net proceeds from the sale of these assets will behas been used for general corporate purposes. As a result of these transactions, a gain on sale of assets of $11.3 million was recognized, which is included in the Company'sour unaudited condensed consolidated statement of operations in gain on sale of assets for the 13three and 26 weekssix months ended August 1, 2020.

In connection with each of thethese sales, the Companywe leased-back from the applicable purchasers itsour corporate headquarters for an initial term of ten years, and the ancillary office space and refurbishment center for two years. The leaseback agreement for the corporate headquarters contains 3 renewal periods of five years each; the Companywe recognized only the initial term of the lease as part of itsin determining the right-of-use asset and lease liability for the corporate headquarters. The other facilities do not contain a renewal option. The annual rent for the corporate headquarters will startcommenced at $1.7 million, plus taxes, utilities, management fees and other operating and maintenance expenses and will increaseincreases by 2.25% per year. The annual rent for the other facilities will beis $1.3 million with no rent escalation, plus taxes, utilities, management fees and other operating and maintenance expenses. These leaseback agreements are accounted for as operating leases.

With respect to the leaseback of theour corporate headquarters, the Companywe agreed to provide a letter of credit to the buyer-lessorpurchasor-lessor within 18 months from the closing date to secure the Company'sour lease obligation. Given that the purchase price of the corporate headquarters was reduced by $2.8 million to account for the deferred issuance of this letter of credit, as of August 1, 2020 the Companywe recognized a contract asset for the same amount within “prepaid expenses and other current assets” representing the variable consideration on the purchase price. Upon delivering the letter of credit, the Companywe will be entitled to a rent credit of an equivalent amount. This variable consideration is included in the total gain on sale of assets recognized during the second quarter of 2020.
Subsequent to the 26 weeks ended August 1, 2020, we sold and leased-back the Company's Australian and Canadian headquarters. See Note 11, "Subsequent Events," for further information.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rent expense under operating leases was as follows (in millions):
13 Weeks Ended26 Weeks Ended
August 1,
2020		August 3,
2019		August 1,
2020		August 3,
2019
Operating lease cost$78.9 $85.0 $160.3 $171.2 
Variable lease cost (1)
19.2 24.8 40.1 49.1 
Total rent expense$98.1 $109.8 $200.4 $220.3 

(1) Variable lease cost primarily includes percentage rentals and variable executory costs.
During the 26 weeks ended August 1, 2020 and August 3, 2019, the Company had cash outflows of $101.8 million and $150.6 million, respectively, associated with operating leases. Refer to Note 2, "COVID-19 Impacts" as it pertains to impacts of rent obligations due to COVID-19. The Company recognized $34.5 million and $84.7 million during the 26 weeks ended August 1, 2020 and August 3, 2019, respectively, of ROU assets that were obtained in exchange for operating lease obligations. During the 13 and 26 weeks ended August 1, 2020, $0.1 million and $0.6 million, respectively, of store-level ROU asset impairment charges were recognized. The Company did not record any impairment charges related to ROU assets during the 13 and 26 weeks ended August 3, 2019.
The weighted-average remaining lease term, which includes reasonably certain renewal options, and the weighted-average discount rate for operating leases included in the measurement of the Company's lease liabilities, as of August 1, 2020, August 3, 2019, and February 1, 2020, were as follows:
August 1, 2020August 3, 2019February 1, 2020
Weighted-average remaining lease term (years)(1)
4.64.54.7
Weighted-average discount rate4.5 %4.5 %4.1 %

(1) The weighted-average remaining lease term is weighted based on the lease liability balance for each lease as of August 1, 2020, August 3, 2019 and February 1, 2020. This weighted average calculation differs from the Company's simple average remaining lease term due to the inclusion of reasonably certain renewal options and the effect of the lease liability value of longer term leases.
Expected lease payments associated with the Company's operating lease liabilities, excluding percentage rentals, as of August 1, 2020, are as follows (in millions):
Period
Operating Leases (1)
Remainder of Fiscal Year 2020, as of August 1, 2020$137.5
Fiscal Year 2021201.2
Fiscal Year 2022139.6
Fiscal Year 202399.2
Fiscal Year 202470.5
Thereafter120.5
Total remaining lease payments768.5
Less: Interest(74.2)
Present value of lease liabilities (2)
$694.3

(1) Operating lease payments exclude legally binding lease payments for leases signed but not yet commenced.
(2) The present value of lease liabilities consist of $218.8 million classified as current portion of operating lease liabilities and $475.5 million classified as long-term operating lease liabilities.


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6.    Debt
The carrying value of the Company'sour debt is comprised as follows (in millions):
August 1, 2020August 3, 2019February 1, 2020
Revolving credit facility due November 2022$35.0 $0 $0 
French term loans due June 202123.5 0 0 
2021 Senior Notes principal amount198.2 421.4 421.4 
2023 Senior Notes principal amount216.4 0 0 
Less: Senior Notes unamortized debt financing costs(0.9)(2.3)(1.6)
Total debt, net(1)
$472.2 $419.1 $419.8 
Less: short-term debt and current portion of long-term debt(2)
(256.3)0 0 
Long-term debt, net$215.9 $419.1 $419.8 
July 31,
2021		August 1,
2020		January 30, 2021
Revolving credit facility due 2022$— $35.0 $25.0 
French term loans due 2026(1)
47.5 23.5 48.6 
2021 Senior Notes principal amount— 198.2 73.2 
2023 Senior Notes principal amount— 216.4 216.4 
Less: Senior Notes unamortized debt financing costs— (0.9)(0.5)
Total debt, net$47.5 $472.2 $362.7 
Less: short-term debt and current portion of long-term debt(2)
— (256.3)(146.7)
Long-term debt, net$47.5 $215.9 $216.0 

(1)    The Company's subsidiary Micromania SAS obtained an unsecured credit facility duringThese term loans are French government subsidized low interest loans were originally due in July 2021 and October 2021 but were extended in the second quarter of fiscal 2020, which was undrawn and had 0 outstanding borrowings under the facility as of August 1, 2020.2021 for five years to 2026.
(2)    IncludesPrior periods include advances under the revolving credit facility due November 2022, the French term loans originally due JuneJuly 2021 and the current portion ofOctober 2021 and the 2021 Senior Notes, net of the associated unamortized debt financing costs.
2021 Debt Payments
On March 15, 2021, we repaid at maturity $73.2 million outstanding principal amount of our 2021 Senior NotesNotes.
On April 30, 2021, we completed the voluntary early redemption of $216.4 million outstanding principal amount of our 2023 Senior Notes. On June 5, 2020,This voluntary early redemption covered the Company launched an offer to exchange (the “Exchange Offer”) any and all of its then outstanding $414.6 million aggregate principalentire amount of its 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes") by eligible holders for up to $414.6 million of newly issued secured senior notes due 2023 (the “2023 Senior Notes”). On July 6, 2020, in connection with the settlement of the Exchange Offer, the Company issued $216.4 million aggregate principal amount of thethen outstanding 2023 Senior Notes, which bear interest at a raterepresented all of 10.00% per annum, payable semi-annually in arrears on March 15 and September 15our long-term debt. In connection with the voluntary early redemption of each year, beginning on September 15, 2020. Theour 2023 Senior Notes, will mature on March 15, 2023. The Company incurred feeswe paid approximately $219.1 million in aggregate consideration, including accrued and expenses related tounpaid interest. In connection with the Exchange Offervoluntary early redemption of $7.4our 2023 Senior Notes, we paid a $17.8 million primarily consisting of bank and legal fees,make-whole premium which areis included in selling, general and administrative expensesinterest expense in the Company's condensedour consolidated statements of operations for the 13 and 26 weeks ended August 1, 2020.operations. Additionally, approximately 52% or $0.5we accelerated amortization of $0.4 million of the unamortized deferred financing costs associated with the outstanding 2021 Senior Notes will be amortized over the term of theour 2023 Senior Notes.
The 2023 Senior Notes are redeemableFrench Term Loans
During 2020, our French subsidiary, Micromania SAS, entered into 6 separate unsecured term loans for a total of €40.0 million ($47.5 million as of July 31, 2021). In the second quarter of 2021, at the Company's option in whole or in part prior to March 15, 2022 at a price equal to 100.0%request of the principal amount plus a “make-whole premium,” together with accrued and unpaid interest. On or after March 15, 2022, the 2023 Senior Notes will be redeemable, in whole or in part, at a redemption price equal to 100.0% of the principal amount plus accrued and unpaid interest, if any, up to but not including the applicable redemption date. In addition, at any time on or prior to March 15, 2022, the Company may, subject to certain limitations, redeem up to 35.0% of the aggregate principal amount of the 2023 Senior Notes at a redemption price equal to 110.0% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, up to but not including the applicable redemption date, with the net cash proceeds of certain equity offerings. If the Company or its restricted subsidiaries sell assets, under certain circumstances, it will be required to use the net proceeds to make an offer to repurchase 2023 Senior Notes at an offer price in cash in an amount equal to 100.0% of the principal amount plus accrued and unpaid interest, if any, up to but not including the repurchase date. Upon a Change of Control (as defined in the indenture governing the 2023 Senior Notes), the Company must offer to purchase the 2023 Senior Notes at a purchase price equal to 101.0% of the principal amount, plus accrued and unpaid interest, if any, up to but not including the date of such repurchase.
The Company's obligations under the 2023 Senior Notes are fully and unconditionally guaranteed on a senior secured basis by each of its existing and future domestic subsidiaries that guarantee certain of the Company's indebtedness or indebtedness of guarantors, including indebtedness under the Company's asset-based revolving credit facility. The 2023 Senior Notes and the related guarantees are secured by first-priority liens on most of the Company's and the guarantors’ assets other than certain Excluded Property and ABL Priority Collateral (each as defined in the indenture governing the 2023 Senior Notes), and by second-priority liens on the ABL Priority Collateral (which generally includes most of the Company's and the guarantors’ credit card receivables, accounts receivable, payment intangibles, inventory, pledged deposit accounts and related assets), in each case, subject to certain exceptions and permitted liens.
The indenture governing the 2023 Senior Notes contains covenants that restrict the Company's ability and that of its restricted subsidiaries to incur, assume or permit to exist additional indebtedness or guaranty obligations; declare or pay dividends or redeem or repurchase capital stock; prepay, redeem or purchase certain subordinated indebtedness; issue certain preferred stock or similar equity securities; makeMicromania SAS, these term loans and certain investments; sell assets; incur liens; engage in transactions with affiliates; enter into agreements restricting the ability of subsidiaries to pay dividends; and engage in mergers, acquisitions and
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
other business combinations. If the 2023 Senior Notes are assigned investment grade ratings and no default or event of default has occurred and is continuing, certain of these covenants will be suspended. The 2023 Senior Notes indenture also contains certain affirmative covenants and events of default.
The 2023 Senior Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any state and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act and applicable state securities laws.
2021 Senior Notes. In March 2016, the Company issued $475.0 million aggregate principal amount of unsecured 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes"). The 2021 Senior Notes bear interest at the rate of 6.75% per annum with interest payable semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2016. The net proceeds from the offering were usedextended for general corporate purposes, including acquisitions and dividends. The Company incurred fees and expenses related to the 2021 Senior Notes offering of $8.1 million, which were capitalized during the first quarter of fiscal 2016 and are being amortized as interest expense over the term of the notes.five years. In connection with the Exchange Offer discussed above, approximately $0.5 millionextension, the interest rate increased from 0.0% to 0.7% for 3 of these fees and expenses are now being amortized as interest expense over the term loans totaling €20.0 million, and 1% for the remaining 3 term loans totaling €20.0 million. The French government has guaranteed 90% of the 2023 Notes. The 2021 Senior Notes were sold in a private placement and are not registered under the Securities Act. The 2021 Senior Notes were offered in the United States to "qualified institutional buyers"term loans pursuant to the exemption from registration under Rule 144A of the Securities Act anda state guaranteed loan program instituted in exempted offshore transactions pursuant to Regulation S under the Securities Act.
During the 26 weeks ended August 1, 2020, the Company repurchased $6.8 million of its 2021 Senior Notes in open market transactions at prices ranging from 71.5% to 79.1% of par value, of which $0.5 million were retired as of May 2, 2020, with the remaining $6.3 million retired as of May 21, 2020. In connection with the Exchange Offer, $216.4 million aggregate principal amountCOVID-19 pandemic.
Each of Micromania SAS's term loans, as described above, restrict the ability of Micromania SAS to make distributions and loans to its affiliates, and include various events that would result in the automatic acceleration of the 2021 Senior Notes was exchanged at par for the 2023 Senior Notes and all interest that had accrued on the 2021 Senior Notes that were exchanged was paid through July 6, 2020, thus leaving an aggregate principal amount of the 2021 Senior Notes of $198.2 million as of August 1, 2020.
During the first half of fiscal 2019, the Company repurchased $53.6 million of its 2021 Senior Notes in open market transactions at prices ranging from 99.6% to 101.5% of par value.
In connection with the Exchange Offer, the Company entered into the Fifth Supplemental Indenture governing its 2021 Senior Notes, which became effective on July 6, 2020. The Fifth Supplemental Indenture deleted several sections of the original indenture in their entirety,loans thereunder, including sections that placed certain restrictions on the Company and its subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, the incurrence of additional debt, the repurchase of debt and payments of dividends to its stockholders.
In addition, the Fifth Supplemental Indenture eliminated certain events of default, including defaults related to the failure to pay any principal or interest when due, acceleration of other debt, breachesindebtedness, a change of covenants, failure to pay certain judgmentscontrol and certain events of bankruptcy, insolvency and reorganization of the Company's subsidiaries. However, the indenture continues to include events of default for failure to pay the principal or interest owing in respect of the 2021 Senior Notes and for certain events of bankruptcy, insolvency and reorganization of the Company. If an event of default, as amended by the Fifth Supplemental Indenture, were to occur and be continuing, then the principal amount of the 2021 Senior Notes, plus accrued and unpaid interest, if any, could be declared to be immediately due and payable. Such amounts would automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization were to occur.receivership events.
Revolving Credit Facility
The Company maintainsWe maintain an asset-based revolving credit facility (the “Revolver”) with a borrowing base capacity ofup to $420 million and a maturity date of November 2022. The Revolver also includes a $200 million expansion feature and $50$100 million letter of credit sublimit, and allows for an incremental $50 million first-in, last-out facility. The applicable margins for prime rate loans range from 0.25% to 0.50% and, for the London Interbank Offered (“LIBO”("LIBO") rate loans, range from 1.25% to 1.50%. The Revolver is secured by substantially all of the assets of the Company and the assets of its domestic subsidiaries. As of July 31, 2021, the applicable margin was 0.25% for prime rate loans and 1.25% for LIBO rate loans.
BorrowingThe agreement governing our Revolver places certain restrictions on us and our subsidiaries, including, among others, limitations on asset sales, additional liens, investments, incurrence of additional debt and share repurchases. Additionally, the agreement contains customary events of default, including, among others, payment defaults, breaches of covenants and certain events of bankruptcy, insolvency and reorganization. The Revolver is subject to a fixed charge coverage ratio covenant if availability under the Revolver is limited tobelow a borrowing base which allows the Company to borrow up to 90% of the appraisal value of the inventory, plus 90% of eligible credit card receivables, net of certain reserves. The borrowing base provides for borrowing of up to 92.5% of the appraisal value during the period between July 15 and October 15 of each year. Letters of credit reduce the amount available to borrow under the Revolver by an amount equal to the face value of the letters of credit. The Company's ability to pay cash dividends, redeem options and repurchase shares is generally permitted, except under certain circumstances, including if either (1) excess availability under the Revolver is less than 20%, or is projected to be within six months after such payment or (2) excess availability under the Revolver is less than 15%, or is projected to be within six months after such payment, and the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months, is 1.0:1.0 or less. In the event that excess availability under the Revolver is at any time less than the greater of (1) $30 million or(the "Availability Reduction").
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(2) 10%As of July 31, 2021, we had no borrowings outstanding under the lesserRevolver. During the first quarter of the total commitment or the borrowing base, the Company will be subject to a fixed charge coverage ratio covenant of 1.0:1.0 (the "Availability Reduction").
The Revolver places certain restrictions on the Company and its subsidiaries, including limitations on asset sales, additional liens, investments, loans, guarantees, acquisitions and the incurrence of additional indebtedness. Absent consent from the Company's lenders, it may not incur more than $1 billion of senior secured debt and $750 million of additional unsecured indebtedness to be limited to $2502021, we repaid $25.0 million in general unsecured obligations and $500 million in unsecured obligations to finance acquisitions valued at $500 million or more.
The per annum interest rate under the Revolver is variable and is calculated by applying a margin (1) for prime rate loans of 0.25% to 0.50% above the highest of (a) the prime rate of the administrative agent, (b) the federal funds effective rate plus 0.50% and (c) the LIBO rate for a one month interest period as determined on such day plus 1.00%, and (2) for LIBO rate loans of 1.25% to 1.50% above the LIBO rate. The applicable margin is determined quarterly as a function of the Company's average daily excess availability under the facility. In addition, the Company is required to pay a commitment fee of 0.25% for any unused portion of the total commitmentborrowings under the Revolver. As of August 1, 2020, the applicable margin was 0.25% for prime rate loans and 1.25% for LIBO rate loans.
The Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with covenants, any material representation or warranty made by the Company or the borrowers proving to be false in any material respect, certain bankruptcy, insolvency or receivership events affecting the Company or its subsidiaries, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of the Company or certain of its subsidiaries. During the 26 weeks ended August 1, 2020, the Company borrowed $150.0 million and repaid $115.0 million under its revolving credit facility. As of August 1, 2020,July 31, 2021, total availability under the Revolver after giving effect to the Availability Reduction was $28.4$100.9 million, with no outstanding borrowings of $35.0 million and outstanding standby letters of credit of $27.3$58.2 million. The Company isWe are currently in compliance with all covenants in the financial requirementsRevolver.
Letter of Credit Facilities
Separately from the Revolver, we maintain uncommitted letter of credit facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees, at times supported by cash collateral. As of July 31, 2021, we had $17.8 million of outstanding letters of credit and bank guarantees under facilities outside of the Revolver.
The Revolver terms stated above were in effect as of August 1, 2020. On August 28, 2020 the Company entered into an agreement that amended certain terms of the Revolver and a new letter of credit facility with Bank of America, N.A. See Note 11, "Subsequent Events" for further details.
Luxembourg Line of Credit
In September 2007, the Company's Luxembourg subsidiary entered into a $20.0 million Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit is available to the Company's foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and for the issuance of bank guarantees and letters of credit to support operations. As of August 1, 2020, there were 0 cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $1.0 million.
French Term Loans and Credit Facility
During the second quarter of fiscal 2020, the Company's French subsidiary, Micromania SAS, entered into 3 separate unsecured term loans for a total of €20.0 million. The term loans bear interest at 0% and mature in June 2021, but may be extended for up to five additional years at Micromania SAS's request. In connection with any extension, the interest rate would increase at a rate to be determined at the time of the extension. The French government has guaranteed 90% of the term loans pursuant to a state guaranteed loan program instituted in connection with the COVID-19 pandemic.
In addition, Micromania SAS obtained a credit facility of €20.0 million that allows it to obtain short term loans of 10 to 93 days in duration to support its working capital needs. €10.0 million of the commitments expire in March 2021 and the remaining €10.0 million expire in June 2021. Loans made under the credit facility accrue interest at a variable rate tied to the Euro Interbank Offered Rate plus an applicable margin of 1.5% and are secured by a pledge of the bank account from which repayments of the loans are or will be made. As of August 1, 2020, the credit facility was undrawn and there were 0 outstanding borrowings under the facility.
Each of the term loans and the credit facility restrict the ability of Micromania SAS to make distributions and loans to its affiliates and include various events that result in the automatic acceleration of the loans, including failure to pay any principal or interest when due, acceleration of other indebtedness, a change of control and certain bankruptcy, insolvency or receivership events.
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7.    Commitments and Contingencies
Commitments
During the 26 weekssix months ended August 1, 2020,July 31, 2021, there were no material changes to the Company'sour commitments as disclosed in its 2019our 2020 Annual Report on Form 10-K.10-K except as discussed in Note 6, "Debt."
Contingencies
Legal Proceedings
In the ordinary course of business, the Company is,we are, from time to time, subject to various legal proceedings, including matters involving wage and hour employee class actions, stockholder actions and consumer class actions. The CompanyWe may enter into discussions regarding settlement of these and other types of lawsuits, and may enter into settlement agreements, if it believeswe believe settlement is in the best interest of itsour stockholders. The Company doesWe do not believe that any such existing legal proceedings or settlements, individually or in the aggregate, will have a material effect on itsour financial condition, results of operations or liquidity.
8.    Earnings Per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive securities outstanding during the period. Potentially dilutive securities include stock options, unvested restricted stock and unvested restricted stock units outstanding during the period, using the treasury stock method. Potentially dilutive securities are excluded from the computations of diluted earnings per share if their effect would be antidilutive. A net loss from continuing operations causes all potentially dilutive securities to be antidilutive. The Company hasWe have certain undistributed stock awards that participate in dividends on a nonforfeitablenon-forfeitable basis, however, their impact on earnings per share under the two-class method is negligible.
A reconciliation of shares used in calculating basic and diluted net income (loss)loss per common share is as follows (in millions):
13 Weeks Ended26 Weeks Ended Three Months EndedSix Months Ended
August 1,
2020		August 3,
2019		August 1,
2020		August 3,
2019		 July 31,
2021		August 1,
2020		July 31,
2021		August 1,
2020
Weighted-average common shares outstandingWeighted-average common shares outstanding65.0 100.0 64.7 101.2 Weighted-average common shares outstanding72.6 65.0 69.3 64.7 
Dilutive effect of stock options and restricted stock awards0 0 0 0 
Dilutive effect of stock options, restricted stock and restricted stock unitsDilutive effect of stock options, restricted stock and restricted stock units— — — — 
Weighted-average diluted common shares outstandingWeighted-average diluted common shares outstanding65.0 100.0 64.7 101.2 Weighted-average diluted common shares outstanding72.6 65.0 69.3 64.7 
Anti-dilutive stock options and restricted stock awards3.7 2.5 3.7 2.5 
Anti-dilutive stock options, restricted stock and restricted stock unitsAnti-dilutive stock options, restricted stock and restricted stock units0.9 3.7 0.9 3.7 
Shares of restricted stock granted by us are considered to be legally issued and outstanding as of the date of grant, notwithstanding that the shares remain subject to risk of forfeiture if the vesting conditions for such shares are not met, and are included in the number of shares of Class A common stock outstanding disclosed on the cover page of this Quarterly Report on Form 10-Q as of September 1, 2021. Restricted stock units represent the right to receive an equivalent number of shares upon satisfaction of the vesting conditions therein. Weighted average common shares outstanding excludes time-based and performance-based unvested restricted stock and unvested restricted stock units as restricted shares and restricted stock units are treated as issued and outstanding for financial statement presentation purposes only after such awards have vested and, therefore, have ceased to be subject to a risk of forfeiture. As of July 31, 2021, August 1, 2020 and January 30, 2021 there were 0.9 million, 3.7 million and 4.6 million, respectively, of unvested restricted stock and restricted stock units. As of July 31, 2021, August 1, 2020 and January 30, 2021 there were 76.5 million, 68.9 million and 69.9 million, respectively, shares of Class A common stock, including unvested restricted shares, legally issued and outstanding.

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9.    Segment Information
The Company operates itsWe operate our business in 4 geographic segments: United States, Canada, Australia and Europe.
The Company identifiesWe identified segments based on a combination of geographic areas and management responsibility. Segment results for the United States include retail operations in 50 states and Guam; itsour e-commerce website www.gamestop.com;operations; and Game Informer® magazine; and Simply Mac, which was sold in September 2019.magazine. The United States segment also includes general and administrative expenses related to the Company'sour corporate headquarters in Grapevine, Texas. Segment results for Canada include retail and e-commerce operations in Canada and segment results for Australia include retail and e-commerce operations in Australia and New Zealand. Segment results for Europe include retail and e-commerce operations in 6 countries for 2021 and 10 European countries. As a result of the rationalization of our global store base and the wind-down of certain European operations that began in fiscal 2019, as of August 1, 2020 the Company has ongoing operations in 6 European countries. The Company measurescountries for 2020. We measure segment profit using operating earnings, which is defined as income from continuing operations before intercompany royalty fees, net interest expense and income taxes. Transactions between reportable segments consist primarily of royalties, management fees, intersegment loans and related interest. There were 0no material intersegment sales during the 13three and 26 weekssix months ended July 31, 2021 and August 1, 2020 and August 3, 2019.2020.

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GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Segment information for the 13three and 26 weekssix months ended July 31, 2021 and August 1, 2020 and August 3, 2019 is as follows (in millions):
United
States		CanadaAustraliaEuropeConsolidated
three months ended July 31, 2021
Net sales$795.1 $62.8 $131.1 $194.4 $1,183.4 
Operating (loss) earnings(50.2)(0.8)3.6 (10.6)(58.0)
three months ended August 1, 2020
Net sales$584.2 $41.9 $149.1 $166.8 $942.0 
Operating (loss) earnings(71.7)(0.7)11.6 (24.8)(85.6)
United
States		CanadaAustraliaEuropeConsolidated
13 weeks ended August 1, 2020
six months ended July 31, 2021six months ended July 31, 2021United
States		CanadaAustraliaEuropeConsolidated
Net salesNet sales$584.2 $41.9 $149.1 $166.8 $942.0 Net sales$1,761.4 $124.7 $246.0 $328.1 $2,460.2 
Operating (loss) earningsOperating (loss) earnings(71.7)(0.7)11.6 (24.8)(85.6)Operating (loss) earnings(53.8)(3.7)3.2 (44.5)(98.8)
13 weeks ended August 3, 2019
six months ended August 1, 2020six months ended August 1, 2020
Net salesNet sales$880.0 $63.0 $121.2 $221.5 $1,285.7 Net sales$1,344.8 $81.6 $262.8 $273.8 $1,963.0 
Operating loss(414.1)(7.1)(2.2)(23.3)(446.7)
Operating (loss) earningsOperating (loss) earnings(122.8)(10.1)11.1 (71.8)(193.6)

United
States		CanadaAustraliaEuropeConsolidated
26 weeks ended August 1, 2020
Net sales$1,344.8 $81.6 $262.8 $273.8 $1,963.0 
Operating (loss) earnings(122.8)(10.1)11.1 (71.8)(193.6)
26 weeks ended August 3, 2019
Net sales$2,023.2 $135.6 $222.8 $451.8 $2,833.4 
Operating loss(361.9)(12.4)(10.4)(44.5)(429.2)

10.    Income Taxes
In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures include deferring the due dates of tax payments and other changes to their income and non-income-based tax laws as well as providing direct government assistance through grants and forgivable loans. The Coronavirus Aid, Relief, and Economic Securities Act (the "CARES Act"), which was enacted on March 27, 2020 in the United States, includesincluded measures to assist companies, including temporary changes to income and non-income-based tax laws. With respect to the CARES Act, the Company currently expects to benefitwe have benefited from the deferral of certain payroll taxes, through the end of calendar year 2020, theallowed carryback of a 2020 net operating loss, for fiscal 2020, the modification of limitation on business interest and the technical correction with respect to qualified improvement property. As a result of the net operating loss allowed to be carried back pursuant to the CARES Act, U.S. federal income tax receivable increased to $157.8 million as of July 31, 2021 compared to $0 million as of August 1, 2020. U.S. federal income tax receivable is included in prepaid expenses and other current assets in our consolidated balance sheet.
The Company
Our interim tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events and/or adjustments that may occur during the quarter and the first half of 2021.

We recognized an income tax expense of $3.1 million, or (5.3)%, for the three months ended July 31, 2021 compared to an income tax expense of $17.9 million, or (19.2)%, for the 13 weeksthree months ended August 1, 2020. Our effective income tax rate of (5.3)% is primarily due to not recognizing tax benefits on current period losses as well as forecasted income taxes due in specific foreign and state jurisdictions within which we operate. Our effective tax rate of (19.2)% for the three months ended August 1, 2020 comparedwas primarily due to having recorded significant valuation allowance increases, partially offset by certain tax benefits related to the CARES Act, during that period.

We recognized an income tax benefitexpense of $40.1$4.4 million, or (3.5)%, for the 13 weekssix months ended August 3, 2019. The Company's effective income tax rate decreased to (19.2)% for the 13 weeks ended August 1, 2020July 31, 2021 compared to 8.8% for the 13 weeks ended August 3, 2019. The decrease in the effective income tax rate and the corresponding change from tax benefit to tax expense compared to the prior year quarter was primarily driven by the significant decrease in the pre-tax book loss, impacts of the CARES Act, the relative mix of earnings across the jurisdictions within which the Company operates, the impact of significant valuation allowances established in the U.S. in the current year, and the discrete tax effect of the sale and leaseback transactions during the second quarter.
The Company recognizedan income tax expense of $68.3 million, or (32.9)%, for the 26 weekssix months ended August 1, 2020. Our effective income tax rate of (3.5)% is primarily due to not recognizing tax benefits on current period losses as well as forecasted income taxes due in specific foreign and state jurisdictions within which we operate. Our effective tax rate of (32.9)% for the six months ended August 1, 2020 compared to an income tax benefit of $37.8 million for the 26 weeks ended August 3, 2019. The Company's effective income tax rate decreased to (32.9)% for the 26 weeks ended August 1, 2020 compared to 8.5% for the 26 weeks ended August 3, 2019. The decrease in the effective income tax rate and the corresponding change from tax benefit to tax expense compared to the prior year quarter was primarily drivendue to having recorded significant valuation allowance increases, partially offset by the significant decrease in the pre-tax book loss, impacts ofcertain tax benefits related to the CARES Act, the relative mix of earnings across the jurisdictions within which the Company operates, the impact of significant valuation allowances established in the U.S. in the current year, and the discrete tax effect of the sale and leaseback transactions during the second quarter.
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. The Company has established valuation allowances in certain foreign jurisdictions where it has determined existing deferred tax assets are not more likely than not to be realized. During the first quarter of fiscal 2020, a full valuation allowance was established on all the U.S. and state deferred tax assets in the amount of $53.0 million. The Company continues to evaluate the realizability of all deferred tax assets on a jurisdictional basis as it relates to expected future earnings. Should the Company fail to achieve its expected earnings in the coming periods, it may be necessary to establish a valuation allowance against some or all of its deferred tax assets in those jurisdictions not currently subject to a valuation allowance.that period.
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GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11. Subsequent Events
Sale-Leaseback Transactions
On August 12, 2020, the Company sold its Australian headquarters in Eagle Farm, Queensland to an unrelated party for approximately $27.0 million, net of costs to sell, and immediately leased back the facility for a term of ten years on market rate terms at an initial annual base rent of approximately $1.7 million, plus taxes, utilities, management fees and other operating and maintenance expenses which will increase 3.0% annually. The Company intends to use the net proceeds from the sale for general corporate purposes.
On September 1, 2020, the Company sold its Canadian headquarters in Brampton, Ontario for approximately $16.7 million, net of costs to sell, and leaseback the facility for a term of five years on market rate terms at an annual base rent of approximately $0.9 million (subject to customary annual rent escalations) plus taxes, utilities, management fees and other operating and maintenance expenses. The Company intends to use the net proceeds from the sale of its Canadian headquarters for general corporatepurposes.
Amendment to Revolving Credit Facility
On August 28, 2020, the Company entered into the fourth amendment (the “Fourth Amendment”) to the credit agreement governing its Revolver ("Credit Agreement") giving effect to certain amendments, including, but not limited to the following:
•Reduced the amount of the excess availability trigger that determines whether the Company is subject to a fixed charge coverage ratio covenant of 1.0:1.0 from the greater of $30 million and 10% of the borrowing base to the greater of $12.5 million and 10% of the borrowing base;
•Increased the sublimit for the issuances of letters of credit under the Credit Agreement from $50 million to $100 million; and
•Increased the amount of letters of credit debt permitted to be issued separately from, and not pursuant to, the Credit Agreement from $25 million to (i) up to $150 million for letters of credit issued by borrowers/guarantors under the Credit Agreement and (ii) up to $75 million for letters of credit issued for the benefit of foreign subsidiaries, subject to the understanding that the outstanding amount of letters of credit issued under the Credit Agreement, combined with the outstanding amount of letters of credit otherwise permitted by the Credit Agreement cannot exceed $275 million in the aggregate.
Letter of Credit Facility
Also on August 28, 2020, the Company entered into a new letter of credit facility (the “LC Facility”) with Bank of America, N.A. (the “Lender”). The LC Facility provides for the issuance, at the Lender’s option and discretion, of letters of credit cash collateralized at 103% of the face amount thereof, in an amount not to exceed (i) $150 million through February 14 2021 and (ii) $75 million from February 15, 2021 through August 31, 2021. The Lender may terminate the LC Facility at any time. The Company is obligated to pay a fee of 250 basis points per year on the daily undrawn face amount of each letter of credit and such additional fees as may be agreed by the Company and the Lender at the time each letter of credit is issued.
Details on the Fourth Amendment and the LC Facility are included in the Form 8-K the Company filed with the Securities and Exchange Commission on September 2, 2020.
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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ThePlease read the following discussion should be read in conjunctionand analysis of our financial condition and results of operations together with the information contained in our unaudited condensed consolidated financial statements including theand related notes thereto.included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, forward-looking statements can be identified by the use of terms such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “pro forma,” “seeks,” “should,” “will” or similar expressions. Forward-looking statements include our current assumptions, expectations or forecasts of future events.

TheseForward-looking statements are only predictions based on current expectations and assumptions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. You should not place undue reliance on these forward-looking statements. The forward-looking statements involve a number of risks and uncertainties. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. A number of factors could cause our actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those described under the heading “Risk Factors” in this quarterly report on Form 10-Q and Exhibit 99.4 to the Form 8-K filed with the SEC on June 5, 2020, and include risks related to:
•macroeconomic pressures, including the effects of COVID-19 on consumer spending;
•the impact of COVID-19, including government restrictions, on our business and financial results;
•the impact of COVID-19 on costs and availability of capital;
•the economic, social and political conditions in the U.S. and certain international markets;
•the cyclicality of the video game industry;
•our dependence on the timely delivery of new and innovative products from our vendors;
•the impact of technological advances in the video game industry and related changes in consumer behavior on our sales;
•our ability to keep pace with changing industry technology and consumer preferences;
•the impact of international crises and trade restrictions and tariffs on the delivery of our products;
•our ability to obtain favorable terms from our suppliers;
•the international nature of our business;
•our dependence on sales during the holiday selling season;
•fluctuations in our results of operations from quarter to quarter;
•our ability to de-densify our global store base;
•our ability to renew or enter into new leases on favorable terms;
•the competitive nature of our industry;
•our ability to attract and retain executive officers and key personnel;
•the adequacy of our management information systems;
•our reliance on centralized facilities for refurbishment of our pre-owned products;
•our ability to react to trends in pop culture with regard to our sales of collectibles and our dependence on licensed products for a substantial portion of such sales;
•our ability to maintain security of our customer, employee or company information;
•potential harm to our reputation;
•our ability to maintain effective control over financial reporting;
•our vendors’ ability to provide marketing and merchandise support at historical levels;
•restrictions on our ability to purchase and sell pre-owned video games;
•potential decrease in popularity of certain types of video games;
•changes in our tariff, import/export regulations and global tax rate;
•potential future litigation and other legal proceedings;
•potential future actions by activist stockholders;
•changes in accounting rules and regulations; and
•our ability to comply with federal, state, local and international law.

All forward-looking statements included or incorporated by reference in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update or revise any of these forward-looking statements for any reason, whether as a result of new information, future events or otherwise after the date of this Quarterly Report on Form 10-Q, except as required by law.

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OVERVIEW
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is the world's largest video game retailer, which operates approximately 5,100 stores across 10 countries,offers games, entertainment products and offers the best selection of newtechnology through its e-commerce properties and pre-owned video gaming consoles, accessories and video game titles, in both physical and digital formats. GameStop also offers fans a wide variety of POP! vinyl figures, collectibles, board games and more. Through GameStop's unique buy-sell-trade program, gamers can trade in video game consoles, games, and accessories, as well as consumer electronics for cash or in-store credit. Our consumer product network also includes www.gamestop.com and Game Informer® magazine, the world's leading print and digital video game publication.stores.
We operate our business in four geographic segments: United States, Canada, Australia and Europe. Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January. The fiscal yearsyear ending January 29, 2022 and the fiscal year ended January 30, 2021 ("fiscal 2020") and February 1, 2020 ("fiscal 2019") each consist of 52 weeks. All three- and six-month periods presented herein contain 13 weeks and 26 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods, The discussion and analysis of our results of operations refers to continuing operations unless otherwise noted. Our business, like that of many retailers, is seasonal, with the major portion of the net sales realized during the fourth fiscal quarter, which includes the holiday selling season.
Impact from COVID-19
Due to the COVID-19 pandemic, we temporarily closed our U.S. store locations to customer access, as well as closed store locations in Canada, Europe and New Zealand. These temporary store closures began in late March 2020 and by the end of fiscal June 2020, 98% of our stores globally were open to the public following the implementation of the highest level of health and safety protocols recommended by the federal and local health and governmental authorities. During the period of temporary closures, we took several steps to continue to serve our customers via our omnichannel platform by enhancing our online capabilities and curbside pick-up options while also lowering our purchase and expense levels to correspond with the lower demand.
The substantial majority of our stores across the various geographies where we operate have re-opened to the public for the latter portion of the 13 weeks ended August 1, 2020 following the health and safety protocols recommended by the local health and governmental authorities. In addition, many of our stores in the United States continued offering curbside pick-up, ship from store and e-commerce delivery options while they were open to the public. We continue to prioritize the health and safety of our customers and team members. As a result, during the 26 weeks ended August 1, 2020, we incurred $21.4 million to mitigate the impact of the COVID-19 pandemic including incremental wage payments to hourly associates to help offset lost wages due to store closures, enhanced cleaning measures and expanded use of personal protective equipment at our stores, shared service centers and distribution centers across all geographies where we operate.
The COVID-19 pandemic remains a rapidly evolving situation and thecontinues to impact on our business, operating results, cash flows and financial conditions will also depend onconditions. Factors impacted by the COVID-19 pandemic include, but are not limited to, the following, many factors thatof which are not within our control, including the following:control:
•the geographies impacted by the virus;
•changes in the economy, consumer confidence and consumer spending habits, including spending for the merchandise that we sell;
•negative trends in consumer purchasing patterns due to changes in consumers' disposable income, credit availability and debt levels;
•the availability of additional economic stimulus programs introduced by the various governments where we operate;
•disruption to our supply chain including the manufacturing, supply, distribution, transportation and delivery of our products; and
•delays in the release of key video game titles; andtitles.
•a slowdown in the U.S. and global economies, and the timing of the post-pandemic economic recovery.
We are taking steps to improve cash flows and liquidity, which we believe will help us emerge from the COVID-19 pandemic as a more resilient company. These steps include the following:
•reducing inventory receipts to match demand, focusing our purchasing efforts on key hardware, software and accessories products;
•lowering capital spending to focus on mandatory maintenance or near-term high value strategic projects;
•divesting non-strategic assets to free up cash that will be re-deployed for certain strategic investments and initiatives, including the recent completion of sale and lease-back transactions; and
•completing the exchange offer for our senior notes due in 2021.

In addition, during the first quarter of fiscal 2020 and the beginning of the second quarter of fiscal 2020, we took the following steps to preserve liquidity while most of our stores were temporarily closed:
•reduced the base salary for our executive leadership team by graduated amounts ranging from 30%-50% for 9 weeks;
•lowered the cash compensation for the members of the Board of Directors by 50% for 9 weeks;
•reduced pay for certain other employees by graduated amounts across most of the worldwide permanent workforce between 10% and 30% for 9 weeks; and
•forewent merit pay increases for the majority of our associates for fiscal 2020.
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See Note 2, "COVID-19 Impacts" for further details.
Industry OverviewBUSINESS PRIORITIES
Growth in theGameStop has two long-term goals: delighting customers and delivering value for stockholders. We are evolving from a video game industry is generally drivenretailer to a technology company that connects customers with games, entertainment and a wide assortment of products. We are focused on offering vast product selection, competitive pricing and fast shipping – supported by high-touch customer service and a frictionless ecommerce and in-store experience.

We are taking steps that include:
•Increasing the introductionsize of new technology. Gaming consoles have historically launched in five to seven-year cycles as technological developments provide significant improvements in the gaming experience and add other entertainment capabilities. Consumer demand for gaming consoles are typically the highest in the early years of the cycle and the weakest in the latter years. The current generation of consoles include the Sony PlayStation 4 (launched in 2013), Microsoft Xbox One (launched in 2013) and the Nintendo Switch (launched in 2017). The Sony PlayStation 4 and Microsoft XBox One are nearing the end of their cycle as Sony and Microsoft have announced their next generation consoles are expected to launch during the holiday period of 2020.
The sale of video games delivered through digital channelsour addressable market by growing our product catalog across consumer electronics, collectibles, toys and other formscategories that represent natural extensions of gaming continueour business;
•Expanding fulfillment operations to growimprove speed of delivery and take an increasing percentage of physical video game sales. We currently sell various types of products that relate to the digital category, including digitally downloadable content (“DLC”), full game downloads, Xbox LIVE, PlayStation Plus and Nintendo network points cards, as well as prepaid digital and prepaid subscription cards. We have made significant investments in e-commerce, in-store and website functionality to enable our customers to access digital content to facilitate the digital sales and delivery process. We plan to continue to invest in these types of processes and channels to grow our digital sales base and enhance our market leadership position in the video game industry and in the digital aggregation and distribution category.
In our discussion of the results of operations, we refer to comparable store sales, which is a measure commonly used in the retail industry and indicates store performance by measuring the growth or decline in sales for certain stores for a particular period over the corresponding prior year's comparable period.
Our comparable store sales are comprised of sales from our video game stores, including stand-alone collectible stores, operating for at least 12 full months as well as sales relatedservice to our websites and sales we earn from sales of pre-owned merchandise to wholesalers or dealers. Comparable store sales for our international operating segments exclude the effect of changes in foreign exchange rates.
Historically, stores with an active lease designation were included in our comparable stores sales even if there were temporary closures because such temporary closures were primarily due to remodeling and relocations and were typically resolved within fewer than 14 days. Beginning in the first quarter of our fiscal year 2020, we refined the definition of comparable store sales to exclude stores that were closed for 14 consecutive days or more and where curbside delivery was not available to customers. Therefore, comparable sales results for the 13 and 26 weeks ended August 1, 2020 exclude stores that were closed for 14 consecutive days or more primarily due to the COVID-19 pandemic where curbside delivery was not available to customers. These criteria are consistent with the metric used by management for internal reporting and analysis to measure performance of our stores. Comparable store sales reported in prior periods are not affected by this revision.
The calculation of comparable store sales compares the 13 and 26 weeks ended August 1, 2020 to the most closely comparable weeks for the prior year period. The method of calculating comparable store sales varies across the retail industry. As a result, our method of calculating comparable store sales may not be the same as other retailers’ methods. We believe our calculation of comparable store sales best represents our strategy as an omnichannel retailer that provides its consumers several ways to access its products.
BUSINESS STRATEGY
In May of 2019, we announced our multi-year transformation initiative, which we refer to as GameStop Reboot to position 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 the following four tenets. 
Optimize the core business.Improve the efficiency and effectiveness of operations 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 and offerings.
Build a frictionless digital ecosystem. Develop and deploy a frictionless consumer facing digital omni-channel environment, including the recent relaunch of GameStop.com, to reach customers more broadly across all channels and provide them the full spectrum of content and access to products they desire, anytime, anywhere.
Transform vendor partnerships. Transform our vendor and partner relationships to unlock additional high-margin revenue streams and optimize the lifetime value of every customer.customers;
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•Building a superior customer experience, including by establishing a U.S.-based customer care operation, and;
•Strengthening technology capabilities, including by investing in new systems, modernized ecommerce assets and an expanded, experienced talent base.
The Company will continue to invest in growth initiatives, while continuing to prioritize maintaining a strong balance sheet.

Connected to our transformation efforts, we have incurred and expectmay continue to incur future costs including, but not limited to, consulting fees, severance, and store closure costs.costs and expenses for consultants and advisors. See "Consolidated Results from Operations—Selling, General and Administrative Expenses" for further information.
We remain committed to a capital allocation strategy focused on optimizing long-term value creation. With this approach, we will return capital to shareholders when the time is right and balance that opportunity against the need to maintain a strong balance sheet and to invest in responsible growth that will drive innovation for the business.
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CONSOLIDATED RESULTS OF OPERATIONS
The following table sets forth certain statement of operations items (in millions) and as a percentage of net sales, for the periods indicated:
13 Weeks Ended26 Weeks EndedThree Months EndedSix Months Ended
August 1, 2020August 3, 2019August 1, 2020August 3, 2019July 31, 2021August 1, 2020July 31, 2021August 1, 2020
AmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net Sales
Net salesNet sales$942.0 100.0 %$1,285.7 100.0 %$1,963.0 100.0 %$2,833.4 100.0 %Net sales$1,183.4 100.0 %$942.0 100.0 %$2,460.2 100.0 %$1,963.0 100.0 %
Cost of salesCost of sales689.8 73.2 886.6 69.0 1,428.4 72.8 1,963.1 69.3 Cost of sales862.5 72.9 689.8 73.2 1,809.2 73.5 1,428.4 72.8 
Gross profitGross profit252.2 26.8 399.1 31.0 534.6 27.2 870.3 30.7 Gross profit320.9 27.1 252.2 26.8 651.0 26.5 534.6 27.2 
Selling, general and administrative expensesSelling, general and administrative expenses348.2 37.0 481.9 37.4 734.7 37.5 935.6 33.0 Selling, general and administrative expenses378.9 32.0 348.2 37.0 749.2 30.5 734.7 37.5 
Goodwill and asset impairments0.9 0.1 363.9 28.3 4.8 0.2 363.9 12.8 
Asset impairmentsAsset impairments— — 0.9 0.1 0.6 — 4.8 0.2 
Gain on disposal of assetsGain on disposal of assets(11.3)(1.2)— — (11.3)(0.6)— — Gain on disposal of assets— — (11.3)(1.2)— — (11.3)(0.6)
Operating lossOperating loss(85.6)(9.1)(446.7)(34.7)(193.6)(9.9)(429.2)(15.1)Operating loss(58.0)(4.9)(85.6)(9.1)(98.8)(4.0)(193.6)(9.9)
Interest expense, netInterest expense, net7.5 0.8 7.0 0.6 14.2 0.7 14.7 0.6 Interest expense, net0.5 — 7.5 0.8 25.2 1.0 14.2 0.7 
Loss from continuing operations before income taxesLoss from continuing operations before income taxes(93.1)(9.9)(453.7)(35.3)(207.8)(10.6)(443.9)(15.7)Loss from continuing operations before income taxes(58.5)(4.9)(93.1)(9.9)(124.0)(5.0)(207.8)(10.6)
Income tax expense (benefit)17.9 1.9 (40.1)(3.1)68.3 3.5 (37.8)(1.4)
Income tax expenseIncome tax expense3.1 0.3 17.9 1.9 4.4 0.2 68.3 3.5 
Net loss from continuing operationsNet loss from continuing operations(111.0)(11.8)(413.6)(32.2)(276.1)(14.1)(406.1)(14.3)Net loss from continuing operations(61.6)(5.2)(111.0)(11.8)(128.4)(5.2)(276.1)(14.1)
Loss from discontinued operations, net of taxLoss from discontinued operations, net of tax(0.3)— (1.7)(0.1)(0.9)— (2.4)(0.1)Loss from discontinued operations, net of tax— — (0.3)— — — (0.9)— 
Net lossNet loss$(111.3)(11.8)%$(415.3)(32.3)%$(277.0)(14.1)%$(408.5)(14.4)%Net loss$(61.6)(5.2)%$(111.3)(11.8)%$(128.4)(5.2)%$(277.0)(14.1)%
We revisedThe Three and Six Months Ended July 31, 2021 Compared to the categories of our similar products at the end of fiscal 2019. See Note 3, "Revenue," for further details. Three and Six Months Ended August 1, 2020
Net Sales
The following table sets forth net sales by significant product category for the period indicated (dollars in millions):
 Three Months EndedSix Months Ended
 July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Net
Sales		Percent of Net SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net Sales
Hardware and accessories$609.6 51.5 %$441.6 46.9 %$1,313.1 53.4 %$954.7 48.6 %
Software396.6 33.5 386.5 41.0 794.5 32.3 803.5 41.0 
Collectibles177.2 15.0 113.9 12.1 352.6 14.3 204.8 10.4 
Total$1,183.4 100.0 %$942.0 100.0 %$2,460.2 100.0 %$1,963.0 100.0 %
 13 Weeks Ended26 Weeks Ended
 August 1, 2020August 3, 2019August 1, 2020August 3, 2019
Net
Sales		Percent of Net SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net Sales
Hardware and accessories$441.6 46.9 %$554.9 43.2 %$954.7 48.6 %$1,211.4 42.7 %
Software386.5 41.0 558.3 43.4 803.5 41.0 1,291.4 45.6 
Collectibles113.9 12.1 172.5 13.4 204.8 10.4 330.6 11.7 
Total$942.0 100.0 %$1,285.7 100.0 %$1,963.0 100.0 %$2,833.4 100.0 %
Net sales by reportable segment in U.S. dollars were as follows (in millions):
13 Weeks Ended
August 1, 2020August 3, 2019
Net
Sales		Percent of Net SalesComparable Store SalesNet
Sales		Percent of Net SalesComparable Store Sales
United States$584.2 62.0 %(20.1)%$880.0 68.4 %(14.0)%
Canada41.94.4 (15.6)63.0 4.9 (13.4)
Australia149.115.8 30.9 121.2 9.5 (4.0)
Europe166.817.8 (11.6)221.5 17.2 (5.4)
Total$942.0 100.0 %(12.7)%$1,285.7 100.0 %(11.6)%

Three Months Ended
July 31, 2021August 1, 2020
Net
Sales		Percent of Net SalesNet
Sales		Percent of Net Sales
United States$795.1 67.2 %$584.2 62.0 %
Canada62.85.3 41.9 4.4 
Australia131.111.1 149.1 15.8 
Europe194.416.4 166.8 17.8 
Total$1,183.4 100.0 %$942.0 100.0 %
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26 Weeks EndedSix Months Ended
August 1, 2020August 3, 2019July 31, 2021August 1, 2020
Net
Sales		Percent of Net SalesComparable Store SalesNet
Sales		Percent of Net SalesComparable Store SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net Sales
United StatesUnited States$1,344.8 68.5 %(21.8)%$2,023.2 71.4 %(11.9)%United States$1,761.4 71.6 %$1,344.8 68.5 %
CanadaCanada81.64.2 (11.2)135.6 4.8 (9.8)Canada124.75.1 81.6 4.2 
AustraliaAustralia262.813.4 32.4 222.8 7.9 (5.9)Australia246.010.0 262.8 13.4 
EuropeEurope273.813.9 (10.3)451.8 15.9 (9.2)Europe328.113.3 273.8 13.9 
TotalTotal$1,963.0 100.0 %(15.1)%$2,833.4 100.0 %(10.9)%Total$2,460.2 100.0 %$1,963.0 100.0 %
Net Sales
Net sales decreased $343.7 million (26.7%) and $870.4 million (30.7%), during the 13 and 26 weeks ended August 1, 2020, respectively, compared to their prior year periods. Comparable store sales decreased 12.7% and 15.1% during the current quarter and year-to-date periods, respectively. The decrease in net sales for the quarter and year-to-date periods was primarily attributable to the combined impacts of temporary store closures to customer traffic in the United States, Canada and Europe due to the COVID-19 pandemic and the cyclicality of new hardware consoles, which are expected to launch in the fourth quarter of 2020. Although the substantial majority of our stores were able to open for the latter portionFor the second quarter of fiscal 2020, the negative impact related to the on-going COVID-19 pandemic continued to affect our store operations in the United States, Canada, Europe and New Zealand. These declines were partially offset by the performance in our Australia segment which experienced a 23.0% and 18.0% increase in2021, net sales during the 13 and 26 weeks ended August 1, 2020, respectively, as stores in Australia remained open during those weeks. These declines were also partially offset by the increase in our e-commerce sales, which increased 800% and 644% in the current quarter and year-to-date periods, respectively,$241.4 million or 25.6% compared to the same prior year periods. Although ourperiod and increased $497.2 million or 25.3% for the first half of 2021. During the second quarter of 2021, net sales have decreased compared to the prior year periods as described above, we believe the COVID-19 pandemic has increased demand for at home entertainment and connectivity products as consumers are spending more time in their homes and seek in-home entertainment options.
Net sales during the 13 weeks ended August 1, 2020 in our United States, Canada, and Europe segments declinedincreased by 33.6%36.1%, 33.5%49.9%, and 24.7%16.5%, respectively, while net sales in our Australia segment increased 23.0%,decreased by 12.1% when compared to the 13 weeks ended August 3, 2019. Comparable storesame period last year. During the first half of 2021, net sales in the United States, Canada and Europe decreased by 20.1%, 15.6% and 11.6%, respectively, while comparable store sales increased in the Australia segment by 30.9%, primarily due to the factors described above.
Net sales during the 26 weeks ended August 1, 2020 in our United States, Canada, and Europe segments declinedincreased by 33.5%31.0%, 39.8% and 39.4%52.8%, 19.8%, respectively, while net sales in our Australia segment increased 18.0%,decreased by 6.4% when compared to the 26 weeks ended August 3, 2019. Comparablefirst half of last year.
The increase in net sales for the quarter and year-to-date period was primarily attributable to demand from the launch of the new video game consoles from Sony and Microsoft and continued sell-through of the Nintendo gaming product lines coupled with the increase in store salestraffic compared to the same period last year. The abrupt temporary store closures we experienced beginning in March of 2020 due to the COVID-19 pandemic, affected our prior period store operations in the United States, Canada and Europe decreased by 21.8%, 11.2% and 10.3%, respectively, while comparable store sales increased inAustralia remained open during the Australia segment by 32.4%, primarily due to the factors described above.first half of 2020.
Gross Profit
Gross profit decreased 36.8% and 38.6% foron a dollar basis increased $68.7 million, or 27.2% during the 13 and 26 weeks ended August 1, 2020, respectively,second quarter of 2021 when compared to the prior year periods, primarily due to the decrease in sales.same period last year. Gross profit as a percentage of net sales decreasedslightly improved to 26.8% and 27.2% in the current quarter and year-to-date periods27.1%, or 30 basis points, compared to 31.0% and 30.7%26.8% in the prior year quarter. Gross profit for the second quarter and year-to-date periods, respectively, primarily dueof 2021 reflects the shift in product mix towards higher margin categories as stores reopened to foot traffic.
Through the first half of 2021, gross profit increased 21.8%, or $116.4 million on a dollar basis, compared to the same prior year period. Gross profit as a percentage of net sales declined to 26.5%, or 70 basis points, compared to 27.2% in the first half of the prior year. Gross profit for the first half reflects a shift in product mix tointo higher dollar lower margin products includingcategories such as new console hardware given the launch of the generation 9 consoles and increased freight and credit card fees associated with the shift to new hardware and accessories within our hardware and accessories product category. In addition, the year-to-date change includes a shift in product mix to new software.e-commerce sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") decreased $133.7increased $30.7 million (27.7%) and $200.9 million (21.5%)or 8.8% for the 13 and 26 weeks ended August 1, 2020, respectivelysecond quarter of 2021, compared to the same prior year periods. Theperiod. Through the first half of 2021, SG&A expenses increased $14.5 million or 2.0% compared to the same prior year quarter and year-to-date periods included $33.1 millionperiod. SG&A expenses increased as a result of the impact the COVID-19 pandemic had on our store expenses in prior year as we experienced temporary store closures beginning in March of 2020. Contributing to the increase in SG&A expenses are costs associated with our transformation initiativesinto a technology company, which consist of severance and severance. Excluding these charges,divestiture expenses, consulting fees with third parties supporting the decrease in execution of our strategy, and administrative expenses incurred while completing significant debt and equity transactions. We expect to continue to incur costs associated with our transformation into a technology company.
SG&A for bothexpenses as a percentage of sales improved to 32% during the second quarter and year-to-date periods was primarily dueof 2021 compared to reductions in37% during the second quarter of 2020. SG&A expenses as a percentage of sales also improved to 30.5% during the first half of 2021 compared to 37.5% during the first half of 2020. We continue to benefit from lower store payroll and other variable overhead expenses due to temporaryoccupancy costs as a percent of sales driven by our extensive cost reduction initiatives in 2020. These net reductions include 480 permanent store closures since August 1, 2020 as a resultpart of the COVID-19 pandemic and cost savings achieved as a resultde-densification of our GameStop Reboot plan. See Note 2, "COVID-19 Impacts" for further details.store base.

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Goodwill and Asset Impairments
During the 13second quarter of 2021, we did not recognize any asset impairments.
Through the first half of 2021, we recognized $0.6 million in asset impairment charges related to our right-of-use lease assets.
During the second quarter and 26 weeks ended August 1,first half of 2020, we recognized asset impairment charges totaling $0.9 million and $4.8 million, respectively. The charges consist of $0.5 million and $3.2 million, for the current quarter and year-to-date periods, respectively, in impairment charges related to our formerly-owned corporate aircraft, which we sold in the second fiscal quarter of 2020 and $0.4 million and $1.6 million, for the current quarter and year-to-date periods, respectively, in impairment charges associated with store-level assets.
Interest Expense, Net
During the 13 and 26 weeks ended August 3, 2019, we recognized a goodwill impairment charge totaling $363.9 million.second quarter of 2021, interest expense, net was $0.5 million, which decreased by $7.0 million compared to the same period in 2020 primarily due to the voluntary early redemption of the outstanding balance of our 2023 Senior Notes in the first quarter of 2021.
Through the first half of 2021, interest expense, net was $25.2 million, which increased by $11.0 million when compared to the first half of 2020. The impairment chargeincrease in interest expense was primarily as a result of a decline in our market capitalization. As a result of the impairment charge, we have no remaining goodwill.
Gain on Sale of Assets
In July of 2020, we sold, in separate unrelated transactions, to unaffiliated third parties i) our corporate headquarters and ancillary office space in Grapevine, Texas for $28.5$17.8 million net of costs to sell and ii) a nearby refurbishment center for $15.2 million, net of costs to sell. The net proceeds frommake-whole premium paid upon the sale of these assets will be used for general corporate purposes. As a result of these transactions, a gain on sale of assets of $11.3 million was recognized for the 13 weeks and 26 weeks ended August 1, 2020.
In connection with each of these sales, we leased-back from the applicable purchasers our corporate headquarters for an initial term of ten years, and the ancillary office space and refurbishment center for two years. The leaseback agreement for the corporate headquarters contains three renewal periods of five years each; we recognized only the initial termvoluntary early redemption of the lease as partoutstanding balance of our right-of-use asset and lease liability2023 Senior Notes.
Income Tax Expense
We recognized income tax expense of $3.1 million for the corporate headquarters. The other facilities do not contain a renewal option. The annual rent for the corporate headquarters will start at $1.7 million, plus taxes, utilities, management fees and other operating and maintenance expenses and will increase by 2.25% per year. The annual rent for the other facilities will be $1.3 million with no rent escalation, plus taxes, utilities, management fees and other operating and maintenance expenses. These leaseback agreements are accounted for as operating leases.
With respect to the leaseback of the corporate headquarters, we agreed to provide a letter of credit to the buyer-lessor within 18 months from the closing date to secure our lease obligation. Upon delivering such letter of credit, we will be entitled to a rent credit of $2.8 million. This variable consideration is included in the total gain on sale of assets recognized during the second quarter of 2020.
Interest Expense, Net
Interest expense, net increased by $0.5 million (7.1%) during the 13 weeks ended August 1, 20202021 compared to the 13 weeks ended August 3, 2019, primarily due to a decrease in interest income, offset by a decrease in interest expense as a result of the premiums paid in the prior year period on the repurchase of $50.5 million aggregate principal amount of our 2021 Senior Notes during the second quarter of fiscal 2019 and the repurchase of $6.8 million aggregate principal amount of our 2021 Senior Notes during the first half of fiscal 2020.
Interest expense, net decreased by $0.5 million (3.4%), during the 26 weeks ended August 1, 2020 compared to the 26 weeks ended August 3, 2019, primarily due to the early redemption of our $350.0 million 2019 Senior Notes on April 4, 2019 and the repurchase of $6.8 million aggregate principal amount of our 2021 Senior Notes during the first half of fiscal 2020, offset by a decrease in interest income.
Income Tax Expense (Benefit)
We recognizedan income tax expense of $17.9 million for the 13 weeks ended August 1, 2020same period in 2020. Our effective income tax rate increased to (5.3)% for the second quarter of 2021 compared to (19.2)% for the second quarter of 2020. Through the first half of 2021, we recognized income tax expense of $4.4 million compared to an income tax benefitexpense of $40.1$68.3 million for the 13 weeks ended August 3, 2019.same period in 2020. Our effective income tax rate decreasedincreased to (19.2)(3.5)% compared to (32.9)% for the 13 weeks ended August 1, 2020 compared to 8.8% for the 13 weeks ended August 3, 2019.first half of 2020. The decreasechange in the effective income tax rate and the corresponding change from tax benefit to tax expense compared to the prior year quarter was primarily driven by the significant decreasefull valuation allowance that we recognized in the pre-tax book loss, impacts of the CARES Act, the relative mix of earnings across the jurisdictions within which we operate, the impact of significant valuation allowances established in the U.S. in the current year, and the discrete2020 on our deferred tax effect of the sale and leaseback transactions during the second quarter.assets.
We recognized income tax expense of $68.3 millionSee Note 10, "Income Taxes," for the 26 weeks ended August 1, 2020 compared to an income tax benefit of $37.8 million for the 26 weeks ended August 3, 2019. Our effective income tax rate decreased to (32.9)% for the 26 weeks ended August 1, 2020 compared to 8.5% for the 26 weeks ended August 3, 2019. The decrease in the effective income tax rate and the corresponding change from tax benefit to tax expense compared to the prior year quarter was primarily driven by the significant decrease in the pre-tax book loss, impacts of the CARES Act, the relative mix of earnings across the jurisdictions within which we operate, the impact of significant valuation allowances established in the U.S. in the current year, and the discrete tax effect of the sale and leaseback transactions during the second quarter.further information.
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LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal sources of liquidity are cash from operations, cash on hand and our revolving credit facility.facilities. As of August 1, 2020,July 31, 2021, we had total unrestricted cash on hand of $735.1 million$1.7 billion and an additional $28.4$100.9 million of available borrowing capacity under our $420 million asset-based revolving credit facility (the "Revolver"), which had $35.0 million offacilities. On March 15, 2021, we repaid our outstanding borrowings of $25.0 million under the Revolver.
During the first half of 2021, we sold 8,500,000 shares of our common stock in the aggregate under the Q1 ATM and the Q2 ATM. We generated $1.68 billion in aggregate gross proceeds from sales under the Q1 ATM and the Q2 ATM and paid fees to the sales agent of $10.1 million. Additionally, we incurred $0.4 million in other administrative fees in the aggregate in connection with the Q1 ATM and Q2 ATM during the first half of 2021 which are included in selling, general and administration expenses on the consolidated statements of operations. We have used, and intend to continue to use, the $1.67 billion in aggregate net proceeds generated from sales under the Q1 ATM and Q2 ATM for working capital and general corporate purposes, including repayment of indebtedness, funding our transformation and growth initiatives and product category expansion efforts, capital expenditures and the satisfaction of our tax withholding obligations upon the vesting of shares of restricted stock held by our executive officers and other employees.
Additionally, during the first quarter of 2021, we repaid the remaining $73.2 million aggregate principal amount of our then outstanding 2021 Senior Notes and the remaining $216.4 million aggregate principal amount of our then outstanding 2023 Senior Notes. In the second quarter of 2021, at the request of Micromania SAS, the six separate unsecured term loans held by our French subsidiary, Micromania SAS, for a total of €40.0 million ($47.5 million as of August 1, 2020. Our total cash on hand includes $43.2 million proceeds, net of costs to sell and other deductions, from the sales and leasebacks of our corporate headquarters, ancillary office space and a nearby refurbishment center in Grapevine, Texas and $8.6 million net proceeds from the sale of our corporate aircraft.July 31, 2021) were extended for five years. See Note 1, "General Information," and Note 5, "Leases,6, "Debt," for further information.
Availability under our Revolver, which was increased subsequent to August 1, 2020, as described indetails on the Sources of Liquidity section below, provides us additional liquidity throughout the course of the year to fund our operations. Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under the Revolver together will provide sufficient liquidity to fund our operations and transformation initiatives and support corporate capital allocation programs, including any share or debt repurchases that we may undertake, for the next 12 months and the foreseeable future. While factors related to COVID-19 have negatively impacted our results for the first quarter ended May 2, 2020, results for our second quarter ended August 1, 2020, as compared to our first quarter of fiscal 2020, have improved as we continued to achieve the cash flow benefits from cost savings and expense reduction initiatives, as well as disciplined working capital management which supports an improved liquidity position.transactions.
On an ongoing basis, we evaluate and consider certain strategic operating alternatives, including divestitures, restructuring or dissolution of unprofitable business segments, repurchasing shares of our common stock or our outstanding debt obligations, as well as other transactionsequity and debt financing alternatives that we believe may enhance stockholder value. Specific to our 2021 Senior Notes, on July 6, 2020 we issued $216.4 million aggregate principalThe nature, amount of the 2023 Senior Notes in exchange for the same aggregate principal amount of our 2021 Senior Notes. See Note 6, "Debt," for further details on this debt exchange. The amount, nature and timing of any strategic operational changes,change, or purchases of our debt or equity securitiesfinancing transactions that we might pursue will depend on a variety of factors, including, as of the applicable time, our available cash and liquidity and operating performance and other circumstances;performance; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed byunder our current credit arrangements; and overall market conditions. As part of our previously announced GameStop Reboot profit improvement initiative, we are evaluating future strategic and operating alternatives for certain of our unprofitable operating subsidiaries and business units that operate within our international segments. We currently believe that the aggregate amount of any potential charges associated with the disposition or wind-down of certain operations under consideration, primarily relating to lease and severance obligations and accelerated depreciation and amortization, would not be material to our liquidity, results of operations or financial condition.
As a result of the impact of the COVID-19 pandemic around the world, many of our vendors have been impacted by the volatility in the supply chain financing market. AsOur vendors have requested and may continue to request credit support collateral for our inventory purchase obligations and the levels of such collateral will depend on a result, in recent weeks, we have elected to use certain supply chain support instruments such as lettersvariety of credit with a select few vendors to ensure we are maximizing opportunities infactors including our supply chain as the next generationinventory purchase levels, available payment terms for inventories, availability of gaming consoles approaches in the coming few months. We may elect to further use these instruments in the future. Use of these instruments may utilizeborrowing capacity of the borrowing base under our ABL revolving linecredit facilities, favorable credit terms and costs of credit or potentially increase our balanceproviding collateral. See Note 1, "General Information — Restricted Cash" for further details.
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Cash Flows
During the 26 weeks ended August 1, 2020,first half of 2021, cash provided by operations wasflows from operating activities were an outflow of $30.3 million, compared with an inflow of $143.5 million compared toduring the same period last year. The increase in cash used in operations of $646.7$173.8 million duringis primarily due to our efforts in the 26 weeks ended August 3, 2019. The increase in cash provided by operations of $790.2 million was primarily attributable to the optimization of inventory and accounts payable levels as we have focused our operational processprior year to optimize the cash conversion cycle and carryour balance sheet that resulted in carrying more efficient levels of inventory.inventory and improving the cash conversion cycle.
Cash provided byflows from investing activities increasedwere an outflow of $28.3 million during the first half of 2021 compared to an inflow of $36.0 million during the 26 weeks ended August 1, 2020 compared to cash used in investing of $42.2 million during the 26 weeks ended August 3, 2019.same period last year. The $78.2 million increasedecrease in cash provided byfrom investing activities is primarily attributable to lower capital expendituresproceeds received in the currentprior year period and the proceeds fromin connection with the sale and leaseback of our corporate headquarters, ancillary office space and a nearby refurbishment center in Grapevine, Texas and the sale of our corporate aircraft duringin addition to higher capital expenditures in the current year quarter. See Note 1, "General Information," and Note 5, "Leases" for further information.period as we continue to make technology investments.
Cash flows from financing activities were an inflow of $1,203.7 million during the first half of 2021 compared to an inflow of $52.0 million during the same period in the prior year.
During the 26 weeks ended August 1,first quarter of 2021, we received $551.7 million in aggregate net proceeds from the sale of shares of our common stock in the Q1 ATM, net of approximately $5.0 million in fees paid to the sales agent. During the first quarter of 2021, we repaid at maturity $73.2 million of our then outstanding 2021 Senior Notes, repaid $25.0 million of our then outstanding loan borrowings under the Revolver and completed the voluntary early redemption of our then outstanding 2023 Senior Notes for an aggregate of $234.2 million inclusive of a $17.8 million make-whole premium. In addition, we paid $49.9 million for withholding obligations upon the vesting of shares of restricted stock granted under the 2019 Incentive Plan during the first quarter of 2021.
During the second quarter of 2021, we received $1.121 billion in aggregate net proceeds from the sale of shares of our common stock in the Q2 ATM net of approximately $5.1 million in fees paid to the sales agent. We had an outflow of $86.7 million for tax withholding obligations upon the vesting of shares of restricted stock granted under our 2019 Incentive Plan during the second quarter of 2021.
The cash inflow during the first half of 2020 cash provided by financing activities was $52.0 million, consisting primarily ofdue to a net $35.0 million draw down on our Revolver and $23.6 million in proceeds from term loans entered into by our French subsidiary, Micromania SAS. During the 26 weeks ended August 3, 2019, cash used in financing activities was $508.7 million, consisting primarily of the redemption of our $350 million in aggregate principal of 5.5% unsecured senior notes, repurchases of our common stock totaling $62.9 million, open market repurchases of our 2021 Senior Notes totaling $53.6 million and dividends paid on our common stock of $40.5 million.
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Sources of LiquidityLiquidity; Uses of Capital
We utilize cash generated from operations and have funds available to us under ourthe Revolver to cover seasonal fluctuations in cash flows and to support our various initiatives. Our cash and cash equivalents are carried at cost and consist primarily of timeU.S. Government Prime money market funds and cash deposits with commercial banks.
Our asset-basedWe maintain the Revolver haswith a maximum borrowing base capacity of $420 million and a maturity date of November 2022. As of August 1, 2020, ourThe Revolver hadincludes a $200 million expansion feature and $50$100 million letter of credit sublimit, and allowedallows for an incremental $50 million first-in, last-out facility. The applicable margins for prime rate loans range from 0.25% to 0.50% and, for London Interbank Offered ("LIBO") rate loans, range from 1.25% to 1.50%. The Revolver is secured by substantially allAs of the assetsend of the Company.second quarter of 2021, based on our borrowing base and the assetsamounts reserved for outstanding letters of its domestic subsidiaries. We are required to pay a commitment fee of 0.25% for any unused portion of thecredit, total commitmentavailability under the Revolver.Revolver after giving effect to the Availability Reduction was $100.9 million. As of August 1, 2020, our applicable marginsJuly 31, 2021, no loan amounts were 0.25% for prime rate loansoutstanding under the Revolver and 1.25% for LIBO rate loans. Also as of August 1, 2020 we had $35.0$58.2 million of outstanding borrowings and $27.3 million of outstanding standby letters of credit were issued and undrawn under ourthe Revolver.
The agreement governing ourSeparately from the Revolver, we maintain uncommitted facilities with certain lenders that provide for the issuance of letters of credit and the indentures governing our 2021 Senior Notes and 2023 Senior Notes place certain restrictions on us and our subsidiaries, including, among others, limitations on asset sales, additional liens, investments, incurrence of additional debt and share repurchases. In addition, the agreement governing our Revolver and the indentures governing our 2021 Senior Notes and 2023 Senior Notes contain customary events of default, including, among others, payment defaults, breaches of covenants and certain events of bankruptcy, insolvency and reorganization. The Revolver is also subject to a fixed charge coverage ratio covenant if excess availability is below certain thresholds. We are currently in compliance with all covenants under the indentures governing the 2021 Senior Notes and 2023 Senior Notes and the agreement governing our Revolver.
bank guarantees, at times supported by cash collateral. As of August 1, 2020, ourJuly 31, 2021, Senior Noteswe had $17.8 million of outstanding letters of credit and 2023 Senior Notes had an aggregate principal amount outstandingother bank guarantees under facilities outside of $198.2 million and $216.4 million, respectively. Additionally, as of August 1, 2020, our term loans entered into by our French subsidiary, Micromania SAS, had an aggregate principal balance of €20.0 million.the Revolver.
See Note 6, “Debt,” to our unaudited consolidated financial statements"Debt," for additional information related to our Revolver, French term loans, 2021 Senior Notes and 2023 Senior Notes.
Our French subsidiary, Micromania SAS, also maintains a credit facility of €20.0 million that allows it to obtain short term loans of 10 to 93 days in duration to support its working capital needs. €10.0 million of the commitments expire in March 2021 and the remaining €10.0 million expire in June 2021. Loans made under the credit facility accrue interest at a variable rate tied to the Euro Interbank offered Rate plus an applicable margin of 1.5% and are secured by a pledge of the bank account from which repayments of the loans are or will be made. As of August 1, 2020, the credit facility was undrawn and there were no outstanding borrowings under the facility.
Our Luxembourg subsidiary maintains a $20.0 million Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit is available to our foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and for the issuance of bank guarantees and letters of credit to support operations. As of August 1, 2020, there were no cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $1.0 million.
On August 28, 2020, we entered into the fourth amendment (“Fourth Amendment”) to the credit agreement governing our Revolver (“Credit Agreement”) giving effect to certain amendments, including, but not limited to the following:
•Reduced the amount of the excess availability trigger that determines whether the Company is subject to a fixed charge coverage ratio covenant of 1.0:1.0 from the greater of $30 million and 10% of the borrowing base to the greater of $12.5 million and 10% of the borrowing base;
•Increased the sublimit for the issuances of letters of credit under the Credit Agreement from $50 million to $100 million; and
•Increased the amount of letters of credit debt permitted to be issued separately from, and not pursuant to, the Credit Agreement from $25 million to (i) up to $150 million for letters of credit issued by borrowers/guarantors under the Credit Agreement and (ii) up to $75 million for letters of credit issued for the benefit of foreign subsidiaries, subject to the understanding that the outstanding amount of letters of credit issued under the Credit Agreement, combined with the outstanding amount of letters of credit otherwise permitted by the Credit Agreement cannot exceed $275 million in the aggregate.
On the same day, we entered into a new letter of credit facility (the “LC Facility”) with Bank of America, N.A. (the “Lender”). The LC Facility provides for the issuance, at the Lender’s option and discretion, of letters of credit cash collateralized at 103% of the face amount thereof, in an amount not to exceed (i) $150 million through February 14, 2021 and (ii) $75 million from February 15, 2021 through August 31, 2021.
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information.
CRITICAL ACCOUNTING POLICIES
Our unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and do not include all disclosures required under GAAP for complete financial statements. Preparation of these statements requires us to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. For a summary of significant accounting policies and the means by which we develop estimates thereon, see “Part II—Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 20192020 Annual Report on Form 10-K. There have been no material changes to our critical accounting policies from those included in our 20192020 Annual Report on Form 10-K.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Note 1 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.
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OFF-BALANCE SHEET ARRANGEMENTS
We had no material off-balance sheet arrangements as of August 1, 2020.July 31, 2021 other than those disclosed in Note 6, "Debt" of our unaudited consolidated financial statements.
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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's quantitative disclosures about marketour risk factors as set forth in its 2019Item 1A. Risk Factors in our 2020 Annual Report on Form 10-K, except as described below.
The impact of the COVID-19 pandemic both in the United States and globally continues to cause uncertainty and volatility in financial markets, including interest rates and foreign currency exchange rates. The outbreak is expected to have a continued adverse impact on market conditions for the foreseeable future and to trigger a period of global economic slowdown with no known duration. See further discussion in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Report on Form 10-Q.10-K.
ITEM 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company'sOur disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that the information required to be disclosed in the reports that it fileswe file or submitssubmit under the Exchange Act has been appropriately recorded, processed, summarized and reported on a timely basis and are effective in ensuring that such information is accumulated and communicated to management, including itsour principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company'sOur principal executive officer and principal financial officer, with assistance from other members of management, have reviewed the effectiveness of the Company'sour disclosure controls and procedures as of the end of the period covered by this report and, based on that evaluation, determined that itsour disclosure controls and procedures were effective as of August 1, 2020July 31, 2021 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
In response to the COVID-19 pandemic, the CompanyThere has required certain employees, some of whom are involvednot been any change in the operation of the Company's internal controls over financial reporting, to work from home. Despite this change, there have been no changes in the Company’sour internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during theour second quarter ended August 1, 2020 that havehas materially affected, or areis reasonably likely to materially affect, the Company’sour internal control over financial reporting. The Company is continually monitoring and assessing the impact of COVID-19 on its internal controls to minimize any impact it may have on their design and operating effectiveness.
PART II — OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS
InThe matters under the ordinary coursecaption "Legal Proceedings" in Note 7 of its business, the Company is, from timeNotes to time, subject to various legal proceedings, including matters involving wage and hour employee class actions and consumer class actions. The Company may enter into discussions regarding settlement of these and other types of lawsuits, and may enter into settlement agreements, if it believes settlement isConsolidated Financial Statements included in the best interest of its stockholders. The Company does not believe that any such existing legal proceedings or settlements, individually or in the aggregate, will have a material effect
this Quarterly Report on its financial condition, results of operations or liquidity.Form 10-Q are incorporated by reference.

ITEM 1A.    RISK FACTORS
An investment in our company involves a high degree of risk. You should carefully consider the risks below, together with the other information contained in this report and other filings we make with the SEC, before you make an investment decision with respect to our company. The risks described below are not the only ones facing us. Additional risks not presently known to us, or that we consider immaterial, may also impair our business operations. Any of the following risks could materially adversely affect our business, operating results or financial condition, and could cause a decline in the trading price of our Class A Common Stock and the value of your investment.

Risks Related to Our Ability to Grow Our Business

Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effects of the COVID-19 pandemic may adversely affect consumer spending and our financial results.
To varying degrees, our products are sensitive to changes in macroeconomic conditions that impact consumer spending. As a result, consumers may be affected in many different ways, including for example:
•their determination of whether or not to make a purchase;
•their choice of brand, model or price-point; and
•how frequently they upgrade or replace their gaming products.
Real GDP growth, consumer confidence, the COVID-19 pandemic discussed in the following risk factor, inflation, employment levels, oil prices, interest rates, tax rates, housing market conditions, foreign currency exchange rate fluctuations, costs for items such as fuel and food and other macroeconomic trends can adversely affect consumer demand for the products and services that we offer. Geopolitical issues around the world and how our markets are positioned can also impact the macroeconomic conditions and could have a material adverse impact on our financial results.
The impact of the COVID-19 pandemic has had, and is expected to continue to have, an adverse effect on our business and our financial results.
The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains and created significant volatility and disruption of financial markets. The COVID-19 pandemic has had and is expected to continue to have an adverse effect on our business and financial performance. The extent of the impact of the COVID-19 pandemic, including our ability to execute our business strategies as planned, will depend on future developments, including the duration and severity of the pandemic, which are highly uncertain and cannot be predicted.
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In lightresponse to mandates and/or recommendations from federal, state and local authorities, across all of recent developments relatingthe countries in which we operate, as well as decisions we have made to protect the health and safety of our associates and consumers with respect to the COVID-19 pandemic, we have temporarily closed or reduced operations and are continuing to do so in many of our stores. Since the Company amended and restated all risk factors that were included in item "1A. Risk Factors" of its 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 27, 2020. A copybeginning of the amendedpandemic, we temporarily closed stores at various times across our U.S., Europe, Canada and restated riskAustralia regions.
As a result of these closures and reductions, we may reduce hours of a significant number of our associates. We may face store closure requirements and other operation restrictions with respect to some or all of our physical locations for prolonged periods of time due to, among other factors, was provided in Exhibit 99.4evolving and stringent public health directives, quarantine policies, social distancing measures, or other governmental restrictions, which could have a further material impact on our sales and profits.
Concerns have rapidly grown regarding the COVID-19 pandemic. Consumer fears about exposure to the Form 8-Kcoronavirus may continue, which will adversely affect traffic to our stores. Consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the Company filedimpacts of any recession, resulting from the COVID-19 pandemic or other economic events. This may negatively impact sales at our stores and on our websites. Any reduction in customer visits to our stores, and/or spending at our stores or on our websites, will likely result in a loss of sales and profits and other material adverse effects.
The COVID-19 pandemic could impact our supply chain for products we sell, particularly as a result of mandatory shutdowns in locations where our products are manufactured or held for distribution. We could also see significant disruptions of the operations of our logistics service providers, delays in shipments and negative impacts to pricing of certain of our products. Certain “big box” retailers with which we compete in the SEC on June 5, 2020gaming market remained open during the shelter-in-place phase of the pandemic, and is incorporated herein by reference.

we believe this allowed such competitors to gain market share.
In addition, we have incurred, and expect to continue to incur costs in our response to the COVID-19 pandemic that we expect to be significant in total, including, but not limited to, costs incurred to implement operational changes adopted in response to the COVID-19 pandemic and certain payments to or other costs related to associates who were not working as a result of the pandemic. If we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate for a particular region or our company as a whole, we could suffer damage to our reputation and our brand, which could adversely affect our business in the future.
We have taken certain actions and may take additional actions with respect to many of our existing leases during the COVID-19 pandemic, including negotiating with landlords for rent abatement or deferral, terminating certain leases, or discontinuing rent payments, which may subject us to legal, reputational and financial risks. We can provide no assurances that any rent deferrals or abatements will be provided to us.
The COVID-19 pandemic could also adversely affect our liquidity and ability to access the capital markets. Uncertainty regarding the duration of the COVID-19 pandemic may adversely impact our ability to raise additional capital, or require additional capital, or require additional reductions in capital expenditures that are otherwise needed to implement our strategies. While our business is seasonal and we typically anticipate cash usage in the first half of our fiscal year, such usage could continue for a longer duration if the severity of the pandemic does not abate. Our current credit ratings, and any potential future downgrade in our credit ratings, could result in reduced access to the credit and capital markets, more restrictive covenants in documents governing future financial instruments and higher interest costs, and potentially increased lease costs. Furthermore, as a result of the impact of the COVID-19 pandemic on our financial performance, we expect in future periods that our ability to borrow under our revolving credit facility will continue to be reduced to the extent that an additional borrowing or letter of credit would trigger the financial covenant if we would not be in compliance with such covenant at such time.
The extent of the impact of the COVID-19 pandemic on our business and financial results will also depend on future developments, including the duration and spread of the pandemic, the implementation or recurrence of shelter in place or similar orders in the future, its impact on the financial markets in which we operate and spread to other regions, new information that may emerge concerning the severity of the coronavirus and the related impact on consumer confidence and spending, all of which are highly uncertain. Therefore, we cannot reasonably estimate the full extent of the COVID-19 pandemic’s impact on our business and financial results.
Economic, social and political conditions or civil unrest in the U.S. and in certain international markets could adversely affect demand for the products we sell and the ability of our stores to remain open.
Sales of our products involve discretionary spending by consumers. Consumers are typically more likely to make discretionary purchases, including purchasing video game products, when there are favorable economic conditions. Consumer spending may be affected by many economic and other factors outside our control. Some of these factors include consumer disposable income levels, consumer confidence in current and future economic conditions, levels of employment, consumer credit availability, consumer debt levels, inflation, political conditions, the occurrence of civil unrest, and the effect of weather, natural disasters, public health crises, including the COVID-19 pandemic and the related reduced consumer demand, decreased sales and widespread temporary closures. Adverse economic changes in any of the regions in which we sell our products could reduce consumer confidence. The extent to which the COVID-19 pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Socio-political factors, such as civil unrest or other economic or political uncertainties that contribute to consumer unease or harm to our store base, may also result in decreased discretionary spending. These and other social, political and economic factors could adversely affect demand for our products or cause certain of our stores to close, which would negatively impact our business, results of operations and financial condition.
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The video game industry has historically been cyclical and is affected by the introduction of next-generation consoles, which could negatively impact the demand for existing products or our pre-owned business.
The video game industry has historically been cyclical in nature in response to the introduction and maturation of new technology. Following the introduction of new video game platforms, sales of these platforms and related software and accessories generally increase due to initial demand, while sales of older platforms and related products generally decrease as customers migrate toward the new platforms. In addition, the features of new consoles or changes to the existing generations of consoles, including any future restrictions or conditions or the ability to play prior generation video games on such consoles, may adversely affect our pre-owned business. A new console cycle began with the launch of the Sony PlayStation 5 in November 2020, the Microsoft Xbox Series X in November 2020, and the Nintendo Switch in March 2017.
The COVID-19 pandemic could potentially cause material disruptions or delays in our supply chains that develop, manufacture and distribute new consoles and other products we sell. Such disruptions could result in lower levels of sales of next generation consoles as well as the accompanying video games and other products we sell, which could have a material adverse impact on our financial results.
We depend upon the timely delivery of new and innovative products from our vendors.
We depend on manufacturers and publishers to deliver video game hardware, software, and consumer electronics in quantities sufficient to meet customer demand. In addition, we depend on these manufacturers and publishers to introduce new and innovative products and software titles to drive industry sales. We have experienced sales declines in the past due to a reduction in the number of new software titles available for sale. Any material delay in the introduction or delivery, or limited allocations, of hardware platforms or software titles could result in reduced sales. Any reduction in allocation of new hardware platforms or titles by vendors in preference to competitors, such as big box retailers, could have a material adverse impact on our financial results.
Disruptions and delays in our supply chains as a result of severe weather, natural disasters, information technology upgrades, operating issues, public health crises, pandemics, including the COVID-19 pandemic, or other unanticipated events could continue to adversely impact manufacturers’ and publishers’ ability to meet our customer demand. Additionally, the prioritization of shipments of certain products as a result of the pandemic could cause delays in the shipment or delivery of our products. Such disruptions could result in reduced sales.
Technological advances in the delivery and types of video games and PC entertainment hardware and software, as well as changes in consumer behavior related to these new technologies, have and may continue to lower our sales.
The current consoles from Sony, Nintendo, and Microsoft have facilitated download technology. In addition, Microsoft and Sony sell disc-less consoles that are currently available to consumers. Downloading of video game content to the current generation video game systems continues to grow and take an increasing percentage of new video game sales. As a result of quarantine policies and social distancing measures enacted in response to the COVID-19 pandemic, consumers may increasingly download video game content, and any such changes to consumer behavior may continue after such policies and measures are rescinded. If consumers’ preference for downloading video game content continues to increase or these consoles and other advances in technology continue to expand our customers’ ability to access and download the current format of video games and incremental content for their games through these and other sources, our customers may no longer choose to purchase video games in our stores or reduce their purchases in favor of other forms of game delivery. As a result, our business and results of operations may be negatively impacted.
If we fail to keep pace with changing industry technology and consumer preferences, we will be at a competitive disadvantage.
The interactive entertainment industry is characterized by swiftly changing technology, evolving industry standards, frequent new and enhanced product introductions, rapidly changing consumer preferences and product obsolescence. Video games are now played on a wide variety of mediums, including video game consoles, personal computers, mobile phones, tablets, social networking websites and other devices. Browser, mobile and social gaming is accessed through hardware other than the consoles and traditional hand-held video game devices we currently sell.
In order to continue to compete effectively in the video game industry, we must respond effectively to market and technological changes and understand their impact on our customers’ preferences. It may take significant time and resources to respond to these technological changes and changes in consumer preferences. Our business and results of operations may be negatively impacted if we fail to keep pace with these changes.
International events could delay or prevent the delivery of products to our suppliers.
Our suppliers rely on foreign sources, primarily in Asia, to manufacture a portion of the products we purchase from them. As a result, any event causing a disruption of imports, including natural disasters, public health crises, including the ongoing COVID-19 pandemic, or the imposition of import or trade restrictions in the form of tariffs or quotas could increase the cost and reduce the supply of products available to us, which may negatively impact our business and results of operations. Furthermore, the COVID-19 pandemic has resulted in work stoppages at certain suppliers that are part of our supply chain. We have experienced shortages in supply as a result of the interruptions, but if the work stoppages or raw material supply were to be prolonged or expanded in scope, there could be resulting supply shortages which could impact our ability to import certain products on schedule and, accordingly, could have an adverse effect on our business, financial condition and results of operations.
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Our ability to obtain favorable terms from our suppliers and service providers may impact our financial results.
Our financial results depend significantly upon the business terms we can obtain from our suppliers and service providers, including competitive prices, unsold product return policies, advertising and market development allowances, freight charges and payment terms. We purchase substantially all of our products directly from manufacturers, software publishers and, in some cases, distributors. Our largest vendors are Nintendo, Sony, Microsoft, U&I Entertainment and Ubisoft Entertainment, which accounted for 31%, 22%, 9%, 3% and 3%, respectively, of our new product purchases in fiscal 2020. If our suppliers and service providers do not provide us with favorable business terms or allocate reduced volumes of their products to us, we may not be able to offer products to our customers in sufficient volumes or at competitive prices. Vendors may request credit support which could require us to either use cash on hand or collateralize letters of credit with restricted cash or other credit support mechanisms, which would reduce our liquidity available for other purposes.
We depend on third-party delivery services to deliver products to our retail locations, processing centers and customers on a timely and consistent basis, and deterioration in our relationship with these third-party providers or increases in the fees that they charge could reduce our margins, harm our reputation and adversely affect our business and financial condition.
We rely on third parties for the transportation of products and we cannot be sure that these relationships will continue on terms favorable to us, or at all. Delivery and shipping costs have increased from time to time and may continue to increase, and we may not be able to pass these costs directly to our customers. Any increased delivery and shipping costs could harm our business, prospects, financial condition and results of operations by increasing our costs of doing business and reducing our margins, which would negatively affect our operating results. As we continue to reduce the number of our retail locations and increase our e-commerce capabilities, we expect our reliance on third party delivery services will increase.
In addition, if our relationships with these third parties, especially the carriers we rely upon for the majority of our shipping needs, are terminated or impaired, if we are unable to negotiate acceptable terms with these third parties or if these third parties are unable to deliver products for us, whether due to a labor shortage, slow down or stoppage, deteriorating financial or business conditions, responses to the COVID-19 pandemic, terrorist attacks or for any other reason, we would be required to use alternative carriers for the shipment of products to our customers. Changing carriers could have a negative effect on our business and operating results due to the issuancenegative impact on customer experience, including reduced visibility of order status and package tracking and delays in order processing and product delivery, and we may be unable to engage alternative carriers on a timely basis, upon terms favorable to us, or at all. See Item 1A. Risk Factors – Risk Related to Our Retail Operations – “Disruptions to our logistics capability or supply chain may have an adverse impact on our operations.”
Our international operations expose us to numerous risks.
We have international retail operations in Australia, Canada and Europe. Because release schedules for hardware and software introduction in these markets can sometimes differ from release schedules in the United States, the timing of increases and decreases in foreign sales may differ from the timing of increases and decreases in domestic sales. We are also subject to a number of other factors that may affect our current or future international operations. These include:
•economic downturns, specifically in the regions in which we operate;
•currency exchange rate fluctuations and sovereign debt crises;
•international incidents, including public health crises such as the COVID-19 pandemic;
•natural disasters;
•government instability; and
•competitors entering our current and potential markets.
Our operations in Europe are also subject to risks associated with the withdrawal of the 2023 Senior NotesUnited Kingdom from the European Union (“EU”). On January 31, 2020, the United Kingdom of Great Britain and Northern Ireland officially exited the EU (“Brexit”) and entered into a transition period to negotiate the final terms of Brexit. The transition period ended on December 31, 2020. The continued uncertainty regarding the impact of the withdrawal and any resulting increases in tariffs, importation restrictions, out of stocks, volatility in currency exchange rates, including the valuation of the euro and the British pound in particular, changes in the laws and regulations applied in the United Kingdom or impacts on economic and market conditions in the United Kingdom, the EU and its member states and elsewhere may have an adverse impact on consumer demand for our products, unfavorably impact our results of operations and financial condition.
Our international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act and other anti-bribery laws applicable to our operations. While we have policies and procedures intended to ensure compliance with these laws, our associates, contractors, representatives and agents may take actions that violate our policies. Any violations of these laws by any of these persons could have a negative impact on our business.
An adverse trend in sales during the holiday selling season could impact our financial results.
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2020 and 2019, we generated approximately 42% and 34%, respectively, of our sales during the fourth quarter. Any adverse trend in sales during the holiday selling season (for example, because of the continuing and unknown duration and impact of the COVID-19 pandemic and/or related supply chain and other economic effects) could lower our results of operations for the fourth quarter and the entire fiscal year and adversely impact our liquidity.
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Sales of video games containing graphic violence may decrease as a result of actual violent events or other reasons, and our financial results may be adversely affected as a result.
Many popular video games contain material with graphic violence. These games receive an “M” or “T” rating from the Entertainment Software Ratings Board. As actual violent events occur and are publicized, or for other reasons, public acceptance of graphic violence in video games may decline. Consumer advocacy groups may increase their efforts to oppose sales of graphically-violent video games and may seek legislation prohibiting their sales. As a result, our sales of those games may decrease, which could negatively impact our results of operations.
The manner in which we fund tax withholding obligations that will arise upon vesting of outstanding restricted stock awards may require us to use a substantial amount of cash, which would reduce our liquidity, or may result in sales of shares of our Class A Common Stock into the market, which could cause the market price of our Class A Common Stock to decline.
The vesting of shares of restricted stock awarded to our executive officers and other employees may accelerate in connection with certain events (such as the cessation of the grantee’s employment due to death or disability, termination by us without cause or resignation by the grantee with good reason), whether under the terms of employment agreements, our severance plans or policies, or otherwise. Such accelerated vesting could occur in connection with the separation of individuals holding these unvested shares, the vesting of which could be accelerated in accordance with the terms of their employment agreements and the separation conditions.
Tax withholding obligations arise upon the vesting of shares of restricted stock and these obligations must be satisfied at the time they arise through cash payments to the applicable taxing authorities. The amount of the tax withholding obligations due upon the vesting of shares of restricted stock is dependent on the price of our shares of Class A Common Stock on the New York Stock Exchange Offer settled on July 6,the applicable vesting date. The higher the price of the shares of our Class A Common Stock on the vesting date, the higher the tax withholding amount that will be due. Our Class A Common Stock price has recently experienced extreme price fluctuations.
If we were to elect to satisfy tax withholding obligations by withholding and canceling a portion of the shares subject to vesting (sometimes referred to as “share withholding”) and remitting cash to the taxing authorities at the applicable statutory rates on behalf of the holder(s) of applicable awards then, depending on the price of our Class A Common Stock on the vesting date, the amount of these cash payments could be substantial and could have a negative impact on our liquidity and ability to use funds for operational purposes.
We may seek to implement “sell-to-cover” arrangements with one or more holders of shares of restricted stock to minimize our expenditure of cash to satisfy tax withholding obligations. Under such arrangements, a broker would assist the holder to sell, in the open market, all or a portion of the shares subject to vesting and would remit a portion of the sales proceeds to us. We would in turn remit such amounts to the taxing authorities. Such “sell-to-cover” arrangements would enable us to satisfy tax withholding obligations and remain in a net neutral cash position but would result in the sales of shares of our Class A Common Stock into the market and such sales could cause the market price of our Class A Common Stock to decline.

Risks Related to Our Retail Operations

An important element of our business strategy is to de-densify our global store base. Failure to successfully transfer customers and sales from closed stores to nearby stores or our e-commerce channels could adversely impact our financial results.
As a part of our business strategy, we are de-densifying our global store base, which includes closing stores that are not meeting performance standards or stores at the end of their lease terms with the intent of transferring sales to other nearby locations or online. We believe that we can ultimately increase profitability by successfully transferring customers and sales to other stores or online by marketing directly to the PowerUp Rewards members who have shopped in the stores as well as other customers who have recently visited the location that we plan to close. If we are unsuccessful in marketing to customers of the stores that we plan to close or in transferring sales to nearby stores or online, our results of operations could be negatively impacted.
If we are unable to renew or enter into new leases on favorable terms, our revenue may be adversely affected.
All of our retail stores are located in leased premises. If the cost of leasing existing stores increases, we cannot assure that we will be able to maintain our existing store locations as leases expire. In addition, we may not be able to enter into new leases on favorable terms or at all, or we may not be able to locate suitable alternative sites in a timely manner. Our revenues and earnings may decline if we fail to maintain existing store locations, enter into new leases, or locate alternative sites.
Beginning in March 2020 and continuing throughout fiscal 2020, we began negotiating with landlords under leases of stores impacted by the COVID-19 pandemic to defer or abate the applicable rent during the store closure period, to modify the terms (including rent) of our leases going forward after the stores reopen, or in certain instances to terminate the leases and permanently close some of the stores. However, there can be no assurance that we will be able to negotiate rent deferrals or rent abatements, or terminate the leases, on commercially reasonable terms or at all. If we are unable to renegotiate the leases and continue to suspend rent payments, we could be forced to either pay rent for periods in which our stores were closed or default under the leases, in which case landlords could attempt to terminate our leases and accelerate our future rents due thereunder. Our negotiations with landlords may have a negative impact on our ability to renew leases on favorable terms in the future.
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If we are unable to successfully maintain strong retail and e-commerce experiences for our customers, our sales and results of operations could adversely be impacted.

Our business has become increasingly dependent on multiple sales channels as we strive to deliver a seamless shopping experience to our customers through both online and in-store shopping experiences. Operating an e-commerce platform is a complex undertaking and exposes us to risks and difficulties frequently experienced by internet-based businesses, including risks related to our ability to attract and retain customers on a cost-effective basis and our ability to operate, support, expand, and develop our internet operations, website, mobile applications and software and other related operational systems. Continuing to improve our e-commerce platform involves substantial investment of capital and resources, increasing supply chain and distribution capabilities, attracting, developing and retaining qualified personnel with relevant subject matter expertise and effectively managing and improving the customer experience. In-store and e-commerce retail are competitive and evolving environments. Insufficient, untimely or inadequately prioritized or ineffectively implemented investments could significantly impact our profitability and growth and affect our ability to attract new customers, as well as maintain our existing ones.
Enhancing the customer experience through new and evolved programs, such as buy-online-pickup-in-store, new or expanded delivery options, the ability to shop through a mobile application or other similar programs, depends in part on the effectiveness of our inventory management processes and systems, the effectiveness of our merchandising strategy and mix, our supply chain and distribution capabilities, and the timing and effectiveness of our marketing activities, particularly our promotions. Costs associated with implementing store and/or e-commerce initiatives may be higher than expected, and the initiatives may not result in increased sales, including same store sales, customer traffic, customer loyalty or other anticipated results. Website downtime and other technology disruptions in our e-commerce platform, including due to cyber-related issues or natural disasters, and supply and distribution delays and other related issues may affect the successful operation of our e-commerce platform. If we are not able to successfully operate or improve our e-commerce platform and core business, we may not be able to provide a relevant shopping experience or improve customer traffic, sales or margins, and our reputation, operations, financial condition, results of operations and cash flows could be materially adversely affected.

Our strategic plans and transformation initiatives may initially result in a negative impact on our financial results and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all.

Our ability to successfully implement and execute our strategic plans and transformation initiatives is dependent on many factors, some of which are out of our control. Our strategic plans and transformation initiatives may require significant capital investment and management attention at the expense of other business initiatives and may take longer than anticipated to achieve the desired return. Additionally, any new initiative is subject to certain risks, including customer acceptance, competition and the ability to attract and retain qualified personnel to support the initiative.

Pressure from our competitors may force us to reduce our prices or increase spending, which could decrease our profitability.
The retail environment is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions. We compete with mass merchants and regional chains, including Wal-Mart and Target; computer product and consumer electronics stores, including Best Buy; internet-based retailers such as Amazon.com; other U.S. and international video game and PC software specialty stores located in malls and other locations, such as Carrefour and Media Markt; toy retail chains; direct sales by software publishers; the online environments operated by Sony (PlayStation Network), Microsoft (XBox Live), Nintendo (Nintendo Switch Online), as well as other online retailers and game rental companies. We expect competition in e-commerce generally to continue to increase. Some of our competitors have longer operating histories and may have greater financial resources than we do or other advantages. In addition, certain of these competitors may have more experience and infrastructure to support increased delivery orders, and may have improved their ability to deliver products as a result of, including in the case of mall merchants and regional chains, having been permitted to remain open during the COVID-19 pandemic. Additionally, competitors who were able to remain open during the COVID-19 pandemic may create increased competition for allocations from our suppliers. Furthermore, video game products and content are increasingly being digitally distributed and new competitors built to take advantage of these new capabilities are entering the marketplace, and other methods may emerge in the future. The potential increase in consumers’ downloading of video game content in favor of purchasing games in stores as a result of COVID-19 related quarantine policies and social distancing measures could further accelerate consumer purchases of online video game content from other retailers. We also compete with other sellers of pre-owned video game products and other PC software distribution companies, including Steam. Certain of our mass-merchant competitors are expanding in the market for new and pre-owned video games through aggressive pricing which may negatively affect our margins, sales and earnings for these products. Additionally, we compete with other forms of entertainment activities, including browser, social and mobile games, movies, television, theater, sporting events and family entertainment centers. If we lose customers to our competitors, or if we reduce our prices or increase our spending to maintain our customers, we may be less profitable.
If our management information systems fail to perform or are inadequate, our ability to manage our business could be disrupted.
We rely on computerized inventory and management systems to coordinate and manage the activities in our distribution centers, as well as to communicate distribution information to the off-site, third-party operated distribution centers with which we work. The third-party distribution centers pick up products from our suppliers, repackage the products for each of our stores and ship those products to our stores by package carriers. We use inventory replenishment systems to track sales and inventory.
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Our ability to rapidly process incoming shipments of new release titles and deliver them to all of our stores, either that day or by the next morning, enables us to meet peak demand and replenish stores at least twice a week, to keep our stores in stock at optimum levels and to move inventory efficiently. Our systems are subject to damage or interruption from power outages, telecommunications failures, cyber-attacks, security breaches and catastrophic events. If our inventory or management information systems fail to adequately perform their functions, our business could be adversely affected. In addition, if operations in any of our distribution centers were to shut down or be disrupted or if these centers were unable to accommodate stores in a particular region, our business and results of operations may be negatively impacted.
We rely on centralized facilities for refurbishment of our pre-owned products. Any disruption to these facilities could adversely affect our profitability.
We rely on centralized facilities for the refurbishment of many of the pre-owned products that we sell. If any disruption occurred at these facilities, whether due to natural disaster or severe weather, or events such as fire, accidents, power outages, systems failures, restrictions on business operations (including as a result of the COVID-19 pandemic), or other unforeseen causes, sales of our pre-owned products could decrease. Since we generally obtain higher margins on our pre-owned products, any adverse effect on their sales could adversely affect our profitability.
Disruptions to our logistics capability or supply chain may have an adverse impact on our operations.
We depend on package carriers for the delivery of products to our customers and our stores. Any significant interruption or disruption in carrier service to our distribution centers or stores due to severe weather, natural disasters, information technology upgrades, operating issues, disruptions to our transportation network, public heath crises, pandemics, including the COVID-19 pandemic, or other unanticipated events, could impair our ability to obtain or deliver inventory in a timely manner, cause cancellations or delays in shipments to customers or otherwise disrupt our normal business operations.
Our logistics services are operated through our distribution centers. An interruption of operations at any of our distribution centers could have a material adverse effect on the operations of branches served by the affected distribution. Such disaster related risks and effects are not predictable with certainty and, although they typically can be mitigated, they cannot be eliminated. We seek to mitigate our exposures to disaster events in a number of ways. For example, where feasible, we design the configuration of our facilities to reduce the consequences of disasters. We also maintain insurance for our facilities against casualties, and we evaluate our risks and develop contingency plans for dealing with them. Although we have reviewed and analyzed a broad range of risks applicable to our business, the ones that actually affect us may not be those that we have concluded are most likely to occur. Furthermore, although our reviews have led to more systematic contingency planning, our plans are in varying stages of development and execution, such that they may not be adequate at the time of occurrence for the magnitude of any particular disaster event that we may encounter. See Item 1A. Risk Factors -- Risks Related to Our Ability to Grow Our Business – “We depend on third-party delivery services to deliver products to our retail locations, processing centers and customers on a timely and consistent basis, and deterioration in our relationship with these third-party providers or increases in the fees that they charge could reduce our margins, harm our reputation and adversely affect our business and financial condition.”
Our sales of collectibles depend on popularity of and trends in pop culture, and our ability to react to them.
Our sales of collectibles are heavily dependent upon the continued demand by our customers for collectibles, apparel, toys, gadgets, electronics and other retail products for pop culture and technology enthusiasts. The popularity of such products is often driven by movies, television shows, music, fashion and other pop culture influences. The market for, and appeal of, particular types of music, movies, television shows, artists, actors, styles, trends and brands are constantly changing. The interruption in the production of new music, movies and television shows, and the reduced access to our storefronts by consumers caused by the COVID-19 pandemic, has had and is likely to continue to have a negative impact on sales of collectibles. In addition, our failure to anticipate, identify and react appropriately to changing trends and preferences of customers could lead to, among other things, excess inventories and higher markdowns. There can be no assurance that the collectibles and related products that we sell will appeal to our customers.
We depend on licensed products for a substantial portion of our sales of collectibles and our inability to maintain such licenses and obtain new licensed products would adversely affect our sales of collectibles.
We license from others the rights to sell certain of our collectibles and many of these products contain a third party’s trademarks, designs and other intellectual property. If we are unable to maintain current licenses or obtain new licensed products with comparable consumer demand, our sales of collectibles would decline. Furthermore, we may not be able to prevent a licensor from choosing not to renew a license with us and/or from licensing a product to one of our competitors.
If our vendors fail to provide marketing and merchandising support at historical levels, our sales and earnings could be negatively impacted.
The manufacturers of video game hardware and software have typically provided retailers with significant marketing and merchandising support for their products. As part of this support, we receive cooperative advertising and market development payments from these vendors which enable us to actively promote and merchandise the products we sell and drive sales at our stores and on our websites. We cannot assure you that vendors will continue to provide this support at historical levels. If they fail to do so, our business and results of operations may be negatively impacted.
Restrictions on our ability to purchase and sell pre-owned video game products could negatively affect our financial condition and results of operations.
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Our financial results depend on our ability to purchase and sell pre-owned video game products within our stores. Actions by manufacturers or publishers of video game products or governmental authorities to prohibit or limit our ability to purchase or sell pre-owned video game products, or to limit the ability of consumers to play pre-owned video games, could have a negative impact on our results of operations.

Risks Related to Laws and Regulations

Changes to tariff and import/export regulations may negatively impact our future financial condition and results of operations.
The United States and other countries have from time to time proposed and enacted protectionist trade policies that could increase the cost or reduce the availability of certain merchandise. In particular, the previous U.S. administration has made certain changes to import/export tariffs and international trade agreements. The changes announced and made to date do not impact the merchandise that we offer. Any measures that could impact the cost or availability of the merchandise we offer could have an adverse impact on our business because a significant portion of the products we offer are purchased from foreign vendors and manufactured in foreign countries.
Unfavorable changes in our global tax rate could have a negative impact on our business, results of operations and cash flows.
As a result of our operations in many foreign countries, our global tax rate is derived from a combination of applicable tax rates in the various jurisdictions in which we operate. Depending upon the sources of our income, any agreements we may have with taxing authorities in various jurisdictions and the tax filing positions we take in various jurisdictions, our overall tax rate may be higher than other companies or higher than our tax rates have been in the past. We base our estimate of an annual effective tax rate at any given point in time on a calculated mix of the tax rates applicable to our business and to estimates of the amount of income to be derived in any given jurisdiction. A change in the mix of our business from year to year and from country to country, changes in rules related to accounting for income taxes, changes in tax laws in any of the multiple jurisdictions in which we operate or adverse outcomes from the tax audits that regularly are in process in any jurisdiction in which we operate could result in an unfavorable change in our overall tax rate, which could have a material adverse impact on our business and results of our operations.
Legislative actions and changes in accounting rules may cause our general and administrative and compliance costs to increase and impact our future financial condition and results of operations.
In order to comply with laws adopted by the U.S. government or other U.S. or foreign regulatory bodies, we may be required to increase our expenditures and hire additional personnel and additional outside legal, accounting and advisory services, all of which may cause our general and administrative and compliance costs to increase. Significant workforce-related legislative changes could increase our expenses and adversely affect our operations. Examples of possible workforce-related legislative changes include changes to an employer’s obligation to recognize collective bargaining units, the process by which collective bargaining agreements are negotiated or imposed, minimum wage requirements, and health care mandates. In addition, changes in the regulatory environment affecting Medicare reimbursements, workplace safety (including in response to the COVID-19 pandemic), product safety, supply chain transparency, and increased compliance costs related to enforcement of federal and state wage and hour statutes and common law related to overtime, among others, could cause our expenses to increase without an ability to pass through any increased expenses through higher prices. Environmental legislation or other regulatory changes could impose unexpected costs or impact us more directly than other companies due to our operations as a global retailer. Specifically, environmental legislation or international agreements affecting energy, carbon emissions, and water or product materials are continually being explored by governing bodies. Increasing energy and fuel costs, supply chain disruptions and other potential risks to our business, as well as any significant rule making or passage of any such legislation, could materially increase the cost to transport our goods and materially adversely affect our results of operations. Additionally, regulatory and enforcement activity focused on the retail industry has increased in recent years, increasing the risk of fines and additional operational costs associated with compliance.

As a seller of certain consumer products, we are subject to various federal, state, local and international laws, regulations, and statutes relating to product safety and consumer protection.
While we take steps to comply with these laws, there can be no assurance that we will be in compliance, and failure to comply with these laws could result in litigation, regulatory action and penalties which could have a negative impact on our business, financial condition and results of operations. In addition, our suppliers might not adhere to product safety requirements and the Company and those suppliers may therefore be subject to involuntary or voluntary product recalls or product liability lawsuits. Direct costs, lost sales and reputational damage associated with product recalls, government enforcement actions or product liability lawsuits, individually or in the aggregate, could have a negative impact on future revenues and results of operations.
Government regulation of the Internet, e-commerce and other aspects of our business is providingevolving, and we may experience unfavorable changes in or failure to comply with existing or future regulations and laws.
We are subject to a number of regulations and laws that apply generally to businesses, as well as regulations and laws specifically governing the following new risk factorsInternet and e-commerce and the marketing, sale and delivery of goods and services over the Internet.
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Existing and future regulations and laws may impede the growth and availability of the Internet and online services and may limit our ability to operate our business. These laws and regulations, which continue to evolve, cover taxation, tariffs, privacy and data protection, data security, pricing, content, copyrights, distribution, mobile and other communications, advertising practices, electronic contracts, sales procedures, automatic subscription renewals, credit card processing procedures, consumer protections, the provision of online payment services, unencumbered Internet access to our services, the design and operation of websites, and the characteristics and quality of product offerings that are offered online. We cannot guarantee that we have been or will be fully compliant in every jurisdiction, as it is not entirely clear how existing laws and regulations governing issues such as property ownership, sales and other taxes, consumer protection, libel and personal privacy apply or will be enforced with respect to the Internet and e-commerce, as many of these laws were adopted prior to the advent of the Internet and e-commerce and do not contemplate or address the unique issues they raise. Moreover, as e-commerce continues to evolve, increasing regulation and enforcement efforts by federal and state agencies and the prospects for private litigation claims related to its indebtedness:our data collection, privacy policies or other e-commerce practices become more likely. In addition, the adoption of any laws or regulations, or the imposition of other legal requirements, that adversely affect our ability to market, sell, and deliver our products could decrease our ability to offer, or customer demand for, our offerings, resulting in lower net revenue, and existing or future laws or regulations could impair our ability to expand our product offerings, which could also result in lower net revenue and make us more vulnerable to increased competition. Future regulations, or changes in laws and regulations or their existing interpretations or applications, could also require us to change our business practices, raise compliance costs or other costs of doing business and materially adversely affect our business, financial condition and operating results.

Risks Related to Our Common Stock

The indenturemarket price of our Class A Common Stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.

The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control. These factors include, without limitation:
•“short squeezes”;
•comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media;
•large stockholders exiting their position in our Class A Common Stock or an increase or decrease in the short interest in our Class A Common Stock;
•actual or anticipated fluctuations in our financial and operating results;
•risks and uncertainties associated with the ongoing COVID-19 pandemic;
•the timing and allocations of new product releases including new console launches;
•the timing of new store openings or closings;
•shifts in the timing or content of certain promotions or service offerings;
•the effect of changes in tax rates in the jurisdictions in which we operate;
•acquisition costs and the integration of companies we acquire or invest in;
•the mix of earnings in the countries in which we operate;
•the costs associated with the exit of unprofitable markets, businesses or stores;
•changes in foreign currency exchange rates;
•negative public perception of us, our competitors, or industry; and
•overall general market fluctuations.
Stock markets in general and our stock price in particular have recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our company. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. In particular, a large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which has put and may continue to put pressure on the supply and demand for our Class A Common Stock, further influencing volatility in its market price. Additionally, these and other external factors have caused and may continue to cause the market price and demand for our Class A Common Stock to fluctuate substantially, which may limit or prevent our stockholders from readily selling their shares of our common stock and may otherwise negatively affect the liquidity of our Class A Common Stock.

A “short squeeze” due to a sudden increase in demand for shares of our Class A Common Stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our Class A Common Stock.

Investors may purchase shares of our Class A Common Stock to hedge existing exposure or to speculate on the price of our Class A Common Stock. Speculation on the price of our Class A Common Stock may involve long and short exposures. To
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the extent aggregate short exposure exceeds the number of shares of our Class A Common Stock available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase shares of our Class A Common Stock for delivery to lenders of our Class A Common Stock. Those repurchases may in turn, dramatically increase the price of shares of our Class A Common Stock until additional shares of our Class A Common Stock are available for trading or borrowing. This is often referred to as a “short squeeze.”

A large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze. A short squeeze has led and could continue to lead to volatile price movements in shares of our Class A Common Stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our Class A Common Stock necessary to cover their short positions, the price of our Class A Common Stock may rapidly decline. Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment.

Information available in public media that is published by third parties, including blogs, articles, message boards and social and other media may include statements not attributable to the Company and may not be reliable or accurate.

We have received, and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including blogs, articles, message boards and social and other media. This includes coverage that is not attributable to statements made by our officers or associates. Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our Class A Common Stock which could cause stockholders to lose their investments.

A large number of shares of our Class A Common Stock available for future sale could adversely affect the market price of our Class A Common Stock and may be dilutive to current stockholders.

The sales of a substantial number of shares of our Class A Common Stock, or the perception that such sales could occur, could adversely affect the price for our Class A Common Stock. Our Board of Directors may authorize the issuance of additional authorized but unissued Class A Common Stock or other authorized but unissued securities at any time, including pursuant to equity incentive plans. In addition, we have filed a registration statement with the SEC, allowing us to offer, from time to time and at any time, equity securities (including common or preferred stock), subject to market conditions and other factors. Accordingly, we may, from time to time and at any time, seek to offer and sell our equity securities, including sales of our Class A common stock pursuant to our ATM program, based upon market conditions and other factors.

Future sales of a substantial amount of our Class A Common Stock in the public markets by our insiders, or the perception that these sales may occur, may cause the market price of our Class A Common Stock to decline.

Our employees, directors and officers, and their affiliates, hold substantial amounts of shares of our Class A Common Stock. Sales of a substantial number of such shares by these stockholders, or the perception that such sales will occur, may cause the market price of our Class A Common Stock to decline. Other than restrictions on trading that arise under securities laws [(or pursuant to our securities trading policy that is intended to facilitate compliance with securities laws)], including the prohibition on trading in securities by or on behalf of a person who is aware of nonpublic material information, we have no restrictions on the right of our employees, directors and officers, and their affiliates, to sell their unrestricted shares of Class A Common Stock.

Risks Related to Financial Performance or General Economic Conditions

Our results of operations may fluctuate from quarter to quarter.
Our results of operations may fluctuate from quarter to quarter depending upon several factors, some of which are beyond our control. These factors include, but are not limited to:
•the timing and allocations of new product releases including new console launches;
•the timing of new store openings or permanent or temporary closings, including those related to the COVID-19 pandemic;
•the amounts devoted to strategic investments, including in multi-channel capabilities and other business initiatives, and failure to achieve anticipated profitability increases and benefits from such initiatives within the expected time-frames or at all;
•timing and extent of the achievement of anticipated profit increases from investments, if at all
•shifts in the timing or content of certain promotions or service offerings;
•the effect of changes in tax rates in the jurisdictions in which we operate;
•acquisition costs and the integration of companies we acquire or invest in;
•the mix of earnings in the countries in which we operate;
•the costs associated with the exit of unprofitable markets, businesses or stores; and
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•changes in foreign currency exchange rates.
These and other factors could affect our business, financial condition and results of operations, and this makes the prediction of our financial results on a quarterly basis difficult. Also, it is possible that our quarterly financial results may be below the expectations of public market analysts.
The agreement governing our 2023 Senior Notes and our revolving credit facility restrict our current and future operations, particularly our ability to respond to changes or to take certain actions or take advantage of certain business opportunities.
The indentureagreement governing our 2023 Senior Notes and our revolving credit facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and our subsidiaries and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:
•incur, assume or permit to exist additional indebtedness or guaranty certain obligations;
•declare dividends, make payments or redeem or repurchase capital stock or make distributions in respect of capital stock;
•prepay, redeem or purchase certain indebtedness;
•issue certain preferred stock or similar equity securities;
•make loans and certain investments;
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•sell assets;
•incur liens;
•engage in transactions with affiliates;
•enter into agreements restricting our subsidiaries’ ability to pay dividends; and
•engage in mergers, acquisitions and other business combinations.
In addition, the restrictive covenants applicable to our revolving credit facility require us to maintain a fixed charge coverage ratio covenant of 1.0:1.0 in the event that excess availability under the revolving credit facility is at any time less than the greater of (1) $30.0$12.5 million prior to August 28, 2020 ($12.5 million beginning on August 28, 2020) and (2) 10% of the lesser of the total commitment and the borrowing base. As of August 1, 2020, we would not have been in compliance with the fixed charge coverage ratio covenant if it were in effect and, therefore, our borrowing capacity was effectively reduced by $30.0 million. The impact of the COVID-19 pandemic on our financial performance may impair our ability to comply with the fixed charge coverage ratio covenant in the future, which would also impact our access to the availability under the revolving credit facility.
A breach of the covenants or restrictions under the indentureagreement governing our 2023 Senior Notes or our revolving credit facility could result in an event of default under the applicable indebtedness. Such an event of default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the revolving credit facility would permit the lenders under our revolving credit facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our revolving credit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:
•limited in how we conduct our business;
•unable to raise additional debt or equity financing necessary in order to operate during general economic or business downturns; or
•unable to compete effectively or to take advantage of new business opportunities.
These restrictions may affect our ability to grow in accordance with our strategy. In addition, our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing.
To service our indebtedness, we will require a significant amount of cash. We may not be able to generate sufficient cash flow to meet our debt service obligations or refinance our debt on favorable terms.
Our ability to generate sufficient cash flow from operations to make scheduled payments on our indebtedness, including without limitation any payments required to be made under our revolving credit facility or to holders of our 2021 Senior Notes and our 2023 Senior Notes, and to fund our operations, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, including the 2021 Senior Notes and the 2023 Senior Notes, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or if that additional financing would be permitted under the terms of our various debt instruments, then in effect.
Our inability to generate sufficient cash flow to satisfy our debt obligations including the 2021 Senior Notes and the 2023 Senior Notes, or to refinance our obligations on commercially reasonable terms or on a timely basis, would have an negative impact on our business, results of operations and financial condition.
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Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional debt. This could further increase the risks associated with our leverage.
Although the indentures governing our 2021 Senior Notes and 2023 Senior Notes and our revolving credit facility agreement contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. Additionally, these restrictions will not prevent us from incurring obligations that do not constitute indebtedness. Such future indebtedness or obligations may have restrictions similar to, or more restrictive than, those included in the indentures for our 2021 Senior Notes and 2023 Senior Notes or our revolving credit facility agreement. The incurrence of additional indebtedness could impact our financial condition and results of operations.
General Risk Factors

Turnover in our senior management or our inability to attract and retain qualified personnel could have a material adverse impact on our business and results of operations.
Our success depends, in part, on the continuing services and contributions of our leadership team to execute on our strategic plan and to identify and pursue new opportunities. Through a committee of directors, our Board is currently evaluating our executive leadership team skill sets related to meeting changing business requirements and has engaged a third party firm to assist in its evaluation and exploration. This evaluation and exploration could result in a change in one or more of our senior executives. Turnover in key leadership positions within the Company could adversely affect our ability to manage the Company efficiently and effectively, could be disruptive and distracting to management and may lead to additional departures of current personnel, any of which could have a material adverse effect on our business and results of operations.
Our success also depends, in part, upon our ability to attract, motivate and retain a highly trained and engaged workforce, management for our stores and skilled merchandising, marketing, financial and administrative personnel. In addition, the turnover rate in the retail industry is relatively high, and there is an ongoing need to recruit and train new store associates. Factors that affect our ability to maintain sufficient numbers of qualified associates include associate morale, our reputation, unemployment rates, competition from other employers and our ability to offer appropriate compensation packages.
Any turnover in senior management in the future or inability to attract and retain qualified personnel could have a material adverse effect on our business and results of operations.
Recent turnover with our Board may disrupt our operations, our strategic focus or our ability to drive stockholder value.
There have been significant changes to our Board since June 2020 as previously reported in our periodic reports filed with the SEC. Turnover among our Board may disrupt our operations, our strategic focus or our ability to drive stockholder value. If we fail to attract and retain new skilled personnel for our Board, our business and growth prospects could disrupt our operations and have a material adverse effect on our operations and business.

If we do not maintain the security of our customer, associate or company information, we could damage our reputation, incur substantial additional costs and become subject to litigation.
An important part of our business involves the receipt, processing and storage of personal information of our customers and associates, including, in the case of customers, payment information. We have systems and processes in place that are designed to protect against security and data breaches and unauthorized access to confidential information. Nevertheless, cyber-security risks such as malicious software and attempts to gain unauthorized access to data are rapidly evolving and becoming increasingly sophisticated. Techniques or software used to gain unauthorized access, and/or disable, degrade or harm our systems may be difficult to detect for prolonged periods of time, and we may be unable to anticipate these techniques or put in place protective or preventive measures. These attempts to gain unauthorized access could lead to disruptions in our systems, unauthorized release of confidential or otherwise protected information or corruption of data. If individuals are successful in infiltrating, breaking into, disrupting, damaging or otherwise stealing from our computer systems or the computer system of our third-party providers, we may have to make a significant investment to fix or replace them, and may suffer interruptions in our operations in the interim, including interruptions in our ability to accept payment from customers and our ability to issue and redeem loyalty points under our Power Up Rewards program. Such an event may also expose us to costly litigation, government investigations, government enforcement actions, fines and/or lawsuits and may significantly harm our reputation with our members and customers. We are continuously working to upgrade our information technology systems and provide associate awareness training around phishing, malware, and other cyber risks to protect our member, customer, associate, and company data against cyber risks and security breaches. Despite these efforts, we have experienced cybersecurity attacks in the past and there is no guarantee that the procedures that we have implemented to protect against unauthorized access to secured data are adequate to safeguard against future data security breaches. While past cybersecurity attacks have not resulted in material losses, a data security breach or any failure by us to comply with applicable privacy and information security laws and regulations could materially impact our business and our results of operations. Moreover, a data security breach or change in applicable privacy or security laws or regulations could require us to devote significant management resources to address the problems created by the breach or such change in laws or regulations and to expend significant additional resources to upgrade further the security measures that we employ to guard against such breaches or to comply with such change in laws or regulations, which could disrupt our business, operations and financial condition.
Damage to our reputation could adversely affect our business and our ability to attract and retain customers and employees.
Our continued success depends upon customers’ perception of our Company. Any negative publicity relating to our vendors, products, practices or our Company could damage our reputation and adversely impact our ability to attract and retain
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customers and employees. Failure to detect, prevent, or mitigate issues that might give rise to reputational risk or failure to adequately address negative publicity or perceptions could adversely impact our reputation, business, results of operations, and financial condition.

If our internal control over financial reporting is ineffective, our business may be adversely affected and we may lose market confidence in our reported financial information which could adversely impact our business and stock price.
Effective internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements and may not prevent or detect misstatements because of inherent limitations. These limitations include, among others, the possibility of human error, inadequacy or circumvention of controls and fraud. Additionally, remote work arrangements and other operational changes instituted in response to the COVID-19 pandemic may impair our ability to maintain effective internal control over financial reporting.
If we are unable to maintain effective internal control over financial reporting, our ability to report financial information timely and accurately could be adversely affected. As a result, we could lose investor confidence and become subject to litigation or investigations, which could adversely affect our business, operations, financial condition and our stock price.
Litigation and the outcomes of such litigation could negatively impact our future financial condition and results of operations.
In the ordinary course of our business, we are, from time to time, subject to various litigation and legal proceedings, including matters involving wage and hour associate class actions, stockholder and consumer class actions, tax audits and unclaimed property audits by states. The outcome of litigation and other legal proceedings and the magnitude of potential losses therefrom, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify.
Certain of these legal proceedings, if decided adversely to us or settled by us, may require changes to our business operations that negatively impact our operating results or involve significant liability awards that impact our financial condition. The cost to defend litigation may be significant. As a result, legal proceedings may adversely affect our business, financial condition, results of operations or liquidity.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.    OTHER INFORMATION
On May 26, 2021, we received a request from the Staff of the SEC for the voluntary production of documents and information concerning an SEC investigation into the trading activity in our securities and the securities of other companies. The SEC has since called for additional documents, as a follow up to the initial request. We are in the process of producing the documents and have been and intend to continue cooperating fully with the SEC Staff regarding this matter. This inquiry is not expected to adversely impact us.
ITEM 6.    EXHIBITS
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Exhibit
Number		DescriptionPreviously Filed as an Exhibit to and Incorporated by Reference FromDate Filed
4.110.1*
Indenture,Letter Agreement, dated as of July 6, 2020, by and amongJune 9, 2021, between GameStop Corp. as Issuer, the Subsidiary Guarantors party thereto as Subsidiary.
Current Report on Form 8-KJuly 6, 2020
4.2
Form of 10.00% senior secured notes due 2023 (included in Exhibit 4.1).
Current Report on Form 8-KJuly 6, 2020
4.3
Fifth Supplemental Indenture dated as of June 17, 2020, to the Indenture dated as of March 9, 2016, by and among GameStop Corp. as Issuer, the guarantors named therein and U.S. Bank National Association.
Current Report on Form 8-KJuly 6, 2020
10.1
Separation Agreement and Release dated June 1, 2020, by and between Daniel J. Kaufman and the Company.Matthew Furlong.
Current Report on Form 8-KJune 4, 20209, 2021
10.2*
Letter Agreement, dated June 9, 2021, between dated June 22, 2020, byGameStop Corp. and between Diana Saadeh-Jajeh and the Company.Mike Recupero.
Current Report on Form 8-KJuly 2, 2020
10.3
Intercreditor Agreement, dated July 6, 2020, by and among Bank of America, N.A., U.S. Bank National Association, each additional representative from time to time party thereto, and each of the Credit Parties thereto.
Current Report on Form 8-KJuly 6, 2020
10.4
Pledge and Security Agreement, dated as of July 6, 2020 by and among the Company, the subsidiary guarantors party thereto, and U.S. Bank National Association.
Current Report on Form 8-KJuly 6, 2020June 9, 2021
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
32.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are imbeddedembedded within the inline XBRL document.Submitted electronically herewith.
101.SCHInline XBRL Taxonomy Extension SchemaSubmitted electronically herewith.
101.CALInline XBRL Taxonomy Extension Calculation LinkbaseSubmitted electronically herewith.
101.DEFInline XBRL Taxonomy Extension Definition LinkbaseSubmitted electronically herewith.
101.LABInline XBRL Taxonomy Extension Label LinkbaseSubmitted electronically herewith.
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).Submitted electronically herewith.
*This exhibit is a management or compensatory contract.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GAMESTOP CORP.
By: /s/ JAMES A. BELLMichael Recupero
 James A. BellName: Michael Recupero
 Executive Vice President andTitle: Chief Financial Officer
 (Principal Financial Officer)
Date: September 9, 20208, 2021 
GAMESTOP CORP.
By:/s/    DIANA JAJEH
Diana Jajeh
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: September 9, 2020

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