Thank you, George. Good afternoon, everyone. I'd like to take this time to walk you through our second quarter fiscal 2020 results, and then I will share some insight, now we're approaching the remainder of the year.
As George just discussed, we're very pleased with our team's ability to adapt to the challenging operating environment during the second quarter.
Our ability to swiftly pivot, to leverage our investment in creating a frictionless omnichannel digital ecosystem, drive efficiencies across the business and continue to optimize our core operations, enabled us to generate significant positive free cash flow and exit the quarter with a materially stronger balance sheet, improved liquidity and an overall healthier business model as we approach the console launches later this year.
Turning to a review of the second fiscal quarter, total consolidated global sales declined 26.7% to $942 million from $1.29 billion in the prior year period. The sales decline, which was slightly better than our internal expectations set at the beginning of the year, reflects the impact of, one, the last few months of the seven year gaming console cycle. Two, a 13% reduction in operating days due to the temporary store closures driven by the global COVID-19 pandemic. Three, 10% fewer stores versus the end of the second quarter last year, as part of our de-densification strategy. And finally delays in new software titles in response to the global COVID-19 pandemic, with several titles continuing to shift to later this year. Despite these headwinds, we reported a comparable store sales declined of 12.7%, after adjusting for approximately 8 percentage points from the impact of reduced operating days due to COVID-19.
As a reminder, our permanent store closures representing approximately 6 percentage points of our overall sales decline are a result of our ongoing efforts to either de-densify certain geographies or exit unprofitable businesses.
As part of those ongoing efforts, we continue to realize strong sales transfer, which is accretive to profitability, averaging almost 40% of sales recaptured through the transfer to neighboring locations, or our online business. Relatedly, we're pleased to report that we completed the Nordics region wind down as of the end of July.
In terms of category performance, while hardware and accessories declined 20% for the second quarter reflecting the end of the generation console cycle, we did see better than expected sales in these categories, with the recent surge in video game product demand during the COVID-19 pandemic era.
As George mentioned, some of the sales declines later in the quarter are largely reflected of a lack of console hardware supply in the marketplace, given we're operating at the end of the console cycle along with some COVID-19-related effects within the supply chain.
However, importantly, the Nintendo Switch continues to perform very well, and we leveraged our market share leading position around the world on this product line.
Additionally, we have and continued to leverage our pre-owned inventory, particularly in hardware and accessories to supplement lower new hardware availability and drive sales. Overall, software was down 31% for the quarter, despite the strong performance of key titles, such as Animal Crossing and the Last of Us II.
As George mentioned, when there is newness in video games, whether titles or consoles, we perform very well.
However, our performance was somewhat negatively impacted, as numerous title launches were pushed from the first-half of the year into the latter part of the year.
As an example, last year second quarter benefited from the launch of Madden NFL 20, a title that launched in the third quarter this year. Collectibles were down 34% for the quarter as the opportunity for in-store basket additions tend to benefit from higher store traffic, and newness continues to push out the various franchise delays. From a product margin standpoint, gross margins declined due to product mix shifting heavily into hardware. Hardware sales represented about 47% of sales as compared to 43% last year.
As a result, our overall global gross margins were 26.8%, down 420 basis points from the more software led 31% in the fiscal second quarter last year.
Now turning to our expenses and expense management objectives, after adjusting for roughly $11.3 million in divestiture and severance expenses, and costs related to the exchange of our March 2021 notes, our SG&A expenses were $336.9 million, reflecting a decline of approximately $108 million or 24%, compared to adjusted SG&A in the second quarter last year. These results do not adjust for the approximately $2.7 million investment in additional protective and sanitary-related products and equipment in the quarter to ensure the safety of our associates and customers.
Importantly, the pandemic has shown the resiliency of our associates and also continued opportunities to be more effective as an omnichannel retailers. In that light, while some of the lower SG&A will come back with sales volume increases in future quarters, we will maintain a large degree of operating efficiency throughout our stores and distribution centers.
Importantly, a meaningful portion of the expense reductions are permanent, and are directly related to our ongoing efforts to aggressively rationalize the overall cost structure of our business. We realized an operating loss of $85.6 million compared to an operating loss of $446.7 million in the prior year second quarter. Adjusted operating loss excluding transformation, severance and other charges was $84.7 million compared to an operating loss of $45.8 million in the prior year second quarter, reflecting the seasonally slower second quarter period.
Our effective tax rate as reported for the second quarter was a negative 19.2%, and was impacted by certain discrete tax items, primarily related to the sale leaseback transactions and the mix of earnings across the jurisdictions in which we operate.
Excluding those onetime items, our adjusted effective tax rate for the quarter was 1.2%. On a reported basis, our net loss was $111.3 million or a loss of $1.71 per diluted share, compared to a net loss of $415.3 million or loss per diluted share of $4.15 in the prior year second quarter. Adjusted net loss from continuing operations, excluding transformation, severance and other charges was $91.2 million or a loss of $1.40 per diluted share, compared to an adjusted net loss of $32 million or $0.32 per diluted share.
During the second quarter, we continue to focus on optimizing our global store fleet and strategically de-densifying certain markets.
For the quarter, we closed a worldwide net total of 206 stores, bringing our total worldwide to 388 year-to-date, including our Nordics wind down. At the end of the quarter, we operated 5,122 stores worldwide, which is 602 fewer stores compared to last year.
Given the strong sales and profit transfer rates we continue to experience we're on track to close a total of approximately 400 to 450 stores worldwide this fiscal year. These closures along with the growth in our online business and expanded omnichannel capabilities will allow us to more efficiently and profitably service our customers.
Now turning to the balance sheet, which continues to be an area of focus for the team, and a highlight for the second quarter. At the end of the fiscal second quarter, we had total cash of $735 million, well ahead of our expectations of between $575 million and $625million, importantly, as we ended the period with zero net debt. We ended the second quarter with total inventory of $474.6 million compared to $948.9 million in the prior year period, a reduction of 50%.
As we said previously, effective and efficient inventory management, including improved inventory turns, and the resultant cash conversion cycle gains continues to be a significant area of focus for us, and is a key driver of the further improvement in the working capital efficacy.
Our accounts payable at the quarter end were $256.4 million, down from $368.3 million or 30.4% at the end of the second quarter of fiscal 2019, which is directly related to our ability to leverage a flexible supply chain and reduce purchase orders around the world at the very onset of the pandemic. And that create a liability drag on the business or on cash flows.
As a result of these many continued improvements, we realized positive free cash flow of approximately $182 million in the quarter.
In addition to the free cash flow gains during the quarter, we completed the sale of our corporate jet and completed a sale leaseback transaction for three of the five own buildings being offered, adding a total of $51.8 million in liquidity, of which $43.2 million was related to the sale leaseback. Subsequent to the close of the second quarter, we executed sale leaseback transactions for the remaining two buildings being offered, adding an additional approximately $43.7 million in liquidity not visible in the Q2 balance sheet.
Given the relatively stronger performance in the business, and the proceeds from monetizing our real estate assets, we also paid down $100 million of the revolver borrowings and had only $35 million outstanding as of August 1.
As previously announced on July 2, 2020, we completed an exchange offering consent solicitation for the remaining unsecured notes due to mature in March of 2021. We exchanged roughly 52% of the notes that were set to mature in March of '21, well within our range of expectations, given the high retail ownership and the participation by the majority of qualified bondholders. The newly issued notes of approximately $216 million provide additional financial flexibility by replacing and extending the maturity to 2023, as we continue to focus on advancing our long-term strategy and objectives. With regards to roughly $198 million remaining of the 2021 notes, we anticipate redeeming those bonds over the course of the coming months between now and the maturity date. In the second quarter, we had $10.9 million of capital expenditures bringing the year-to-date spend to $17.5 million.
We continue to focus on only mandatory maintenance or near-term high value strategic projects, and anticipate that we will invest between $55 million and $60 million in CapEx for the year before vendor allowances, a significant reduction from the roughly $80 million spent in 2019. I will note this is approximately $15 million more than our previous estimate, but reflects a holiday store merchandising refresh project, for which we will receive a full reimbursement from vendors. Due to the uncertainty regarding the ongoing impact of COVID-19 on the business, we have suspended formal guidance.
However, we do want to provide you with some of the puts and takes that will likely impact the remainder of the year. From a topline perspective, the third quarter will see several key software titles move into Q4. And while the August sales trends are consistent with Q2, those shifts will create somewhat of a headwind for us in September and October.
With the new product launches that generally drive our business as a specialty video game retailer shifting later in the year, such as Call of Duty and Cyberpunk shifting into Q4 and in the case of Microsoft's Halo Infinite launch shifting into 2021, we expect our sales results could be choppy for the remainder of the third quarter. Compounding the sales impact on the software title launches will be the limited availability of current generation new console and accessories supply, as the availability of product for manufacturers remains tight.
We have the ability to lean in on our pre own inventory and we are very well positioned on that side of the business. But as we have anticipated for some time, new hardware sales will likely be pressured as we approach the launch of the new technology. The strength of the balance sheet, in particular, the positive free cash flow trend positions us well from a cash and liquidity standpoint to maximize the upcoming key hardware and software releases in the fourth quarter, and further drive the strategic evolution of our business in 2021 and beyond.
As it relates to our reboot objectives, we continue to be pleased with our progress and are seeing firsthand how these efforts are enabling us to navigate this challenging time. We remain intensely focused on continuing to execute actions to further strengthen our overall financial architecture, including all key profit and expense levers. This is important as a result an organization is a GameStop that is meaningfully more efficient, streamlined and poised to capitalize on a significant profit flow through improvement, as we experience expected robust sales growth in late 2020, led by both the expected new software title slate and the Generation 9 console launch. I will now turn the call over to the operator, and we'll take any questions that you may have.