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Gamestop (GME)

Participants
Eric Cerny IR
George Sherman CEO
Jim Bell EVP & CFO
Ashley Helgans Jefferies
Colin Sebastian Robert W. Baird
William Reuter Bank of America
Joe Feldman Telsey Advisory Group
Seth Sigman Credit Suisse
Curtis Nagle Bank of America
Call transcript
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Operator

Greetings, and welcome to the GameStop Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will file the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Eric Cerny, Investor Relations. Mr. you, Thank Cerny.

begin. You may

Eric Cerny

could and considered earnings welcome update statements, quarter you, such uncertainties GameStop’s are materially to from expectations. to call. strategic today’s This XXXX Any that filed and the we’ll today, and call, measures regarding risk conference Officer, to factors Investors risks the in conjunction expectations call be and will forward-looking into the should will of to fiscal actual statements call no results release cautionary subject any SEC. differ share fiscal the the Officer, Safe assumes be future. in results statements earnings insights A in With as section Thank discussed of On take your can business reports our to earlier statement George the and various provide today with Sherman; call third Then, cause forward-looking with the will Harbor detail the XXXX. financial which GameStop include statement Jim information Executive or in well on and Chief on framework non-GAAP Bell. for are reconciliation these GameStop’s, Jim and website. discussed as our the financial for obligation information. open then Financial found more Chief me George questions. and issued our earnings release other

Now, Company’s the I Chief Executive over like would to George Sherman. turn Officer, call the to

George Sherman

call. I and all today thank for us earnings our everyone well. on third safe and afternoon quarter you Good you Eric. Thanks, hope joining

stabilize, and GameStop. key trajectory The third pivot in transform point our fiscal optimize to a represents quarter

will significant rapid optimizing about industry us operations its in our continues enable strides are that to growth. we plan our made excited core are long-term create as and executing have value We the transformational and stabilizing

as performance with transition a from the X end video Our The results had anticipated, the to impact marking pandemic Generation the the sales we to quarter see highlight challenging coupled Generation third X segueing on the as also period of and of console industry period products. sustained were largely gaming moment. in growth, into which extent global chain mobility is a of I'll supply consumer now what of we beginnings as disruptions retail a transitions some

as year, profitable First, the XX.X% the store to growth year third omni-channel sales in $X.XX sales notwithstanding, during summarize that XXX% saw adjusted ecommerce of down, that the reflecting loss anticipated profitability investments quarter, sales and in declining were share. our the enhance prior an our But we versus per we capabilities.

power console future key we third reduce transformational year in We And significant compared the XXX million improved our work, during on that XX stabilizing continued the expense environment to pandemic, the focus delivered prior expenses over where transformation, we're in balance and growth. significantly ongoing strides of followed executing the beginning only as shows early year. for November we're global are the the I the months can our reductions we not more the million pace the sheet end November but mentioned, expenses and this restricted operations cost unprecedented reductions GameStop. over optimizing in and quarter of to made excited last our are, And Despite with strong pleased delivering of the quarter. so cash the our by evolution plan by far rapid the about in our and with rapid core cash almost performance now $XXX strategies launch we will in SG&A

Our goal is simple.

retailer gaming to leading global be and for entertainment. the omni-channel GameStop all We things are positioning

our best-in-class our North addressable is forefront products strategy console on ecommerce customer's with next the successful of and and sales. early and with realized This successful of focused are driving negative product entire the was the entertainment as first month. events, element closure by set they to We of strategy in expanded games the response extensions and next very delivering optimized they closed majority begin to in positive as XXXX the nearly an a in of our we comparable approach increase by on this options, the an storefronts current ongoing America, products of The important At store them. which whenever growth category comparable sales first Thanksgiving the efforts video our European the XX.X% that services are in being the well years, vast the over products COVID-XX, of month and based encouraged offering. an experience, impact few most digital games with two retail of generation along comprehensive provide Day and launch for store customers despite a enhanced wherever, and products November, footprint. fulfillment our however want Together years, in our market saw

we year. we the significant to generation In global growth reflect the made and with as sales the in grew online next of to performance addition of sales the also In strong omni-channel already line the final to consoles, November of improvements profitability platform, in month have results early these the expect XXX%. appeal these quarter of of generate results, our

quarter. review to optimize importantly, will customer we by and closure particularly We pandemic as the $XXX versus cases global across COVID-XX reduction October lowered the comparable nearly improving two-thirds X the store which for million efficiency core a $XXX XXXX for of X to on expenses the mobility, and in restricted million third our year our Let's leading of the and our over store SG&A fleet through to around some speaking, business accomplishments bringing of permanent. strategic the to retail November. quarter, as our but quarter customers, organization, to view then Jim effectiveness depression roughly sales the additional world total or quarter, our accelerated in percentage specific the access quarter, the believe broadly third points. of off periods to in Pivoting of we highlights for the saw continue in of details of some the share the and by

continue our to worldwide Through areas. beginning the to XXXX, trade both physical optimize store the omni-channel quickly and representing we locations transformation since stores in our work third capabilities de-densification closed presence. through XXX of quarter, the We certain have almost of underperforming

important We affinity in our to for In e-commerce expect year, continued sales closures capital shopping of transferred fleet. little and U.S., to increasing we neighboring will end optimization we an continue of the a in supporting improving footprint. Consumer our of to store see more experience these our the XXXX, efficiency of footprint. profitable same-day and continually e-commerce, ease store the the delivery omni-channel locations point our X,XXX and the the strong profit is fiscal no By of all stores since with began over close optimization to outlay. we middle this journey fulfillment across create in

however of serve and architecture. the to our and shop. see Overall, choose the on sales I'll our is e-commerce XXXX the to stores our we omni-channel profitability close forward as comment which capabilities, opportunity in and of optimize they momentarily, going additional XXXX omni-channel Given wherever, strength whenever to goal customers we now

XX% improve accounts million period XX% inventory than payable, restricted decline We year We our $XXX reduction about $XXX the and million in more sheet. of was in working with and again quarter. continue to the ending a balance a management cash improve prior cash capital third

announcement with our further Finally, the our XX% due sheet, the balance in for continued $XXX the redemption approximately notes of of result outstanding we as a capital XXXX. enhance million of strength structure early our voluntary of for

very As they significantly digital with you changing in the way first efforts to shop us. know, ecosystem customers are our frictionless we committed our to a remain build responding, omni-channel

in of by E-commerce customer this in we led total from best omni-channel recent delivered the customer grow fueled single and success Our the versus to end centricity our low to up sales to on go of this and strategy. and year, continues on experience end reinforcing quarter, year, our represents our focus the percentage e-commerce prior third XXX% we build gains focus historically. increase XX% e-commerce nearly to In material expect core digit the elevated sales for capabilities. has business, penetration a a

also delivery available for same-day ship pickup, buy And capabilities online fulfillment store, to store. our rolled expanded transactions curbside in we stores. pick and up leveraging locations, in our out such that quarter, online of We and option as in have are U.S. XXXX the third now all

last provide with Given a transaction services to same-day delivery. customers can size, mile partner we average delivery relatively profitably high with

options weekly and browse With Our enables with The personalize with increase people the more transactions, much which on increase newly within a app is and in app to basis dramatically version in previous app, in functionality curated customizable engaging a launched same-day October significant and new features, time, the deal select the delivery and a mobile of it customers longer provides hub. improved periods XX% for downloading customer and engagement we've more experience. conversion. using fully available seen is engaging a

now usage, With from e-commerce increased the the sales originating doubled. have app

relevant services forward and conversion, power have leverage use for continue for you to customer new as focus and very acquisition that connect are easy stores, driving e-commerce believe are size, with in features experience XXX deliver today all and how program. our to look pleased in us will and on and of a customer performance products GameStop basket such value. degree a We rolling to the comprehensive, frequency they loyalty forward, These devices already lifetime news initial with higher resulted and to more as of future, in play purchase, will digital gamer XXXX.Going in to early we and our feed wallet up and the well ecosystem as consumers our out lead with a additional see to app enhanced the efforts

and for working XX very we encouraging appreciate strategy, the progress our phase The largely completes metrics. during stabilization the over backdrop, last for are despite COVID-XX you the on strategic been and months optimization As our of these transformation. quarter which our initiatives, on positions next the we've phases made us

the four ongoing presence and future unit. of quickly we physical Before set that have and material of unprofitable ago. X,XXX Nordic close I'd divested our launch Simply achieve just like countries XX businesses months we In for of exited the de-densification the the time, plans in we'll the business to stores optimized Mac review by GameStop to and accomplishments end over that the XXXX.We out discussing through store opportunities, Reboot

improved of $XXX inventory strategy, and at of driving citation the shares investing turns, for We for We store continue overall the in to approximately several productivity XXX% million with significantly out over reduced a $XXX our in point of private We to And own in improved XXXX $XXX buy labor sales debt an increased XX% middle from nearly reducing starting focused to of several growth million. We new SG&A platform notes. faster adding since buildings well sheet of since XX% million sale amount channel our -- XXXX, at to customer with by the including in We have in the to of early Reducing almost outstanding we complete e-commerce unsecured adding of costs key card, the to consensual XX.X XXXX. time definitely payment business take by assets payment due now our significantly offer corporate weighted we’ve year-to-date our our elevated the repurchased average million our million balance billion XXX sale-leaseback options, the of jet, including launch year-to-date. our approximately the announced pay March, $X.XX. we early redemption enhanced to shares label the price capital which an March, flexibility financial and our the on XXXX. XXX $XXX the credit and over spring our exchange million this expanded rent management benefits, five XXX.X options ability several of voluntary delivering million navigate already of to on million options transactions later at of over liquidity. with $XX in We completion pandemic. working office monetized for By stack. mature

and enter cycle to have win during several this fourth As digital new including to the us we console quarter, tailwinds our clear, that omni-channel holiday we acceleration. season, set starting we and up a be video expand But with leader and GameStop focused entertainment to on and console the games be we're market, not services spectrum position a our game customers. products just we're of sell to worldwide for of the

these be shows to of only to gaming a many research PC games. we the continue categories. of online gaming, few monitors, our large to name represent you As play will have major console gamers of Many have a seen, opportunity begun expand game include market skews to exclusives. PC that PC NPD skews industry TVs tables, also computers, majority hardware accessories and by in and

competitive lifetime value games leverage goal and brand and base, overarching to our experienced is expensive omni-channel Our dedicated loyalty and the to drive associates significant sales advantages power across and entertainment. all things, capabilities of

As expanding In an and and GameStop services the as way all of of the are so products plan, global of proud they pandemic. the of our while business, we during tenacity to not very customers to we services meet caused our of the the as our closing, only and we suite evolving customers their to them, expand in since optimize evolve stages stabilize delivering the products over back and play, market unprecedented middle produce our are by teams quarters meaningful needs. addressable with so do disruption look launching five Reboot, results doing our we but our to

We to undertake begun transformational have our we the that to significant business us underway. now work advancements enabling growth profitability, have made to all return have and sales,

and and year strategic next we confident our long-term and sustainable of plans improved to growth at results are transformation beyond, the look we GameStop. As in

the turn to Now, detail. let discuss me financials our more to call over Jim in

Jim Bell

time and the and George. of console third Good then take XXXX to success quarter. into approaching I’d you fourth new this insights the share results, afternoon some you our the you, we're through Thank I'll quarter launch like video how everyone. walk fiscal

long-term And strategy so, third quarter, to while goals our GameStop business the core by our optimizing near-term reducing significant advanced future inventory our in capital our balance sheet continue expenses, making we structure. our discuss, focus profitable improving to we on for strengthening the George progress As and of deliver did on management and growth. transforming

platform the all on and operating has objectives. efficient quickly, and our the we're that business long-term but expand maximizing model. And the intently behind expanding our market our third and addressable console us, new elevated quarter offer, With focused cycle to on omni-channel work growth foundational our evolving methodically profit more to support

for at predominant And game intuitive, higher experience, means consumer entertainment to all consumers to historical of easier of As shopping market, new offerings a capturing we the and relevant and adding incremental a services leadership share GameStop taking lines industry our honor and an therefore an the focus evolve, it addressable for comprehensive role find video with all expand occasions games frictionless put, what the need with the product will in gaming of business we're see opportunity they market, across wallet. gaming and suite margin on entertainment. this categories. simply and purchase console categories greater across making Economically,

third fiscal turn me Let review the the quarter. of

the titles we sales quarter in video fourth final line many performance As mobility shift as some George in drove console quarter third Further, through mentioned, was the retail X our realized transition year and into October of COVID-XX consumer XXXX. top as which Generation spike software case even expected the softness this included of game as we the cycle, quarter down. of

third fewer for $X both sale XXX our and countries, global were below of de-densification. XXXX. businesses mobility combination the was through customer store billion operating comparable and sales, of consolidated our most of quarter lower was exit XX.X% operating the decline the the unprofitable stores the of impact negative and to strategy of part fleet impact our third of store XX.X% retail through as optimize Our foreclosures a The quarter

Geographically, mandates that this performance the days related periods important for region regions, transfer required see a delivering very unit is that operating have by relative profit It reduction note is in New access, to Zealand sales slight operating or in our generally very closure COVID full time. driven little limited short quarter. from and to for the other business not as store well continue strong except strategy. Australia to perform increase sales rates of continue in We and de-densification retail

slight in of performance, lack declined a and terms category the of ahead quarter, quarter, much the the reflected of product to compared for of launch hardware the second accessories of was largely In deceleration continued and year. of And forward XX% to marketplace, hardware the from Nintendo console, the into this pulled perform to continue pre-owned to last second sales. Switch which inventory extremely significantly well, drive new Despite leverage increasing quarter. we expected our

year driven of Duty title was Notably, the year. this shifted of and Software into third the launches, quarter XXXX. by for A quarter of down the XX% quarter fourth of second quarter into from was most launched last Call of fourth the the XXXX. which compared later in lack versus the deceleration to quarter

gross as margin collectibles traffic the of margin credit improvement the offset the the sequentially quarter, freight hardware and being for by processing which and store fees industry-wide business from more quarter collectible of by benefit sales the higher the second begin in than performance overall was product the Our sales margins lower second sales. of penetration reopening e-commerce higher in standpoint, after represents down of stores mix card realize as increase the was during X% during driven a From declined increase mix costs quarter. we as margin our significant quarter closed an

in global our the were basis down gross more software XX.X%, XXX points third margins fiscal last year. overall led Our from quarter XX.X

expenses management year-to-date third versus Now or year. the the expense to over our ahead SG&A of third at reached end a were reported million million turning XXX expectations. XXX in the million of XXX reductions and decline total XX% SG&A of last SG&A cost reflecting quarter objectives, our expenses approximately our reported The quarter

our these of structure aggressively of two-thirds our rationalize to the reductions to ongoing about expect permanent, to cost efforts business. continue reflecting we overall Importantly, be

in of operations come normalized we centers. future of return as more some distribution these to our expect we variable quarters, While stores and back costs

we've We result more loss end, of We year it also of $XX doubled carry certain of XX.X tax initiative, XXXX. status the Income original of the focused these expense benefit have in quarter quarter. in million, prior was of to part entities a foreign operational the of that on Act, by annual in third as a which of the expect the million period actions, a and driven in This impact certain the the compares permanent an this steadfastly change tax Reboot operating for for reductions benefit CARES to than began year third the efficiencies a we in tax a million year elected reported in income additional year five $XX.X To an back which XX.X expense as an prior loss current are compared to million further took lot the third we operating quarter. losses. tax create we of tax future. reductions cost

loss, related assets share share, the was to effective sale share of of loss XXXX $XX.X quarter. the $X.XX reported net our Our or quarter fiscal $X.XX loss to transactions in $X.XX tax with adjusted rate $XX.X million loss compared diluted per for XX.X%. million, of quarter. third prior a XX.X or the a loss sale share, million, per leaseback $X.XX the was Adjusted excluding year compared loss of net to a diluted gain a on the XX.X or diluted On diluted per for basis, net third million net per in loss of

global to our quarter, third optimizing During and focus fleet continue identifying certain we strategically the store markets. on

the stores quarter compared of last to total the net a closed total stores quarter with the bringing fewer we XXX end year. or XXX third of quarter, operated X,XXX to the of our end year-to-date. the At we closures XX For

close began worldwide continue strategy Given and on experience, are stores in we XXX year and X,XXX total in track the fiscal to we over sales part this XXXX. our since to this strong stores nearly of we rates transfer profit

to Importantly, outlay little we're so. to completing these closures no do generally with capital

last the optimize be had XXX.X third third cash Now year, team, the an end almost continued the turning for our higher quarter working quarter, reflecting we cash fiscal and million of million restricted to than our the total to end balance focus of the sheet, continues at capital. of to of XXX which efforts area

completed buildings $XXX.X two our end the last during which $XX.X leaseback we ability Additionally, the quarter were quarter to remaining of leverage to million contributing $XX.X end XX% the sale down to is Accounts and liquidity. year. the million payable from quarter improve to transactions our inventory times being at reduction, the at of the offered, directly total a million third supply in We chain inventory the X.X year, as we quarter a third flexible related improve, time office last reflecting times X,XXX.X reduction period, XX%. in this quarter compared trailing the continue X.X with to turn of efficiency million XX Inventory total from prior third year the management. the million realized ended of inventory months $XXX towards

consistent up At During to outstanding sheet. down to stock. end, notes. some and to by optional on established based of and Separately the related announced and of we of the support quarter, amount in various capital focus the balance is also filed we term spending XX, redemption on our vendor continue redemption and $XX with programs. of senior is asset due redemption of credit today, year, place had the enhance a third term for our $XXX debt $XX and had covers sheet, near shelf optimize our expenditures to depth X.XX% of our the under maintenance reduced statement $XXX debt invest of December the and additional borrowings improve $XX.X term voluntary by the end strengthen approximately we sell of a $XX value outstanding on notes program common projects market short CapExfor third men balance anticipate In The capital profile we structure. of $XX long million facility the which in the to actions Subsequent quarter, The that about million, our million the to our outstanding. and approximately million take million high still we'll revolving the principal million early offer XXXX at XXXX. early offset $XXX will XX% strategic quarter, 'XX we've our voluntary and $XXX.X we million to registration third million quarter capital million

noted I have we our strategic unknown to with this sheet pleased strengthen potential sheet continue several strength balance through have And execute or the than objectives. we're navigate on extremely As we sufficient more liquidity endeavors, achieved as believe pandemic advance effects. and extended times results our as these year, to and balance well any to

timing the depend amount and of program, if prevailing to factors, such, will and As sales price of need of including shares under variety conditions, any we trading other a market of the determine. the shares, on factors

a the accelerate to increasing the gives impacts the further with elevate from while around disruption optionality bolster us expand pragmatic pandemic to flexibility to potential as provides sheet balance position and at as opportunities increase ability the maximum minimal further initiating strategies, which our our speed transformational flexibility this liquidity we world. such any program our and strategy, ensuring leverage omni-channel However, and us further matter

Before our launches spend occurred and to November. demand. with accounts to moving the work experiencing these results continue minutes I consoles highlighting console the that want meet are we that suppliers in unprecedented to demand, of to a initial the few By fourth all quarter outlook,

is software demand for rates opportunities and us party high having get two competitor, Importantly, than leading any of able we allocations to that continue consoles. and first these which in more most to to attachment other for additional cases third-party accessories times are achieve to be that

seen sales so quarter, performance with expect the the far our few of quite in launch, quarters. not fourth strength and the profitability growth in have Given something we strong console we a

the As in sales and despite of Canada Europe most throughout of XX.X%, George of mentioned, to increased store comparable foreclosures November impact November. part

favorably customers respond provided ecosystem. In within e-commerce app continue elevated our our including to omni-channel to and flexibility new our improved fulfillment and options payment our new addition, experience, of

continuing result a the we COVID-XX, of e-commerce grew XXX% start strong in guidance. uncertainty sales November year. month impact suspend quarter, are same the the the fourth around the versus Despite evolving given year-over-year to As last

the have be we COVID-XX mentioned, Europe to seen international we store likely closures levels operations, of fluid due very As things U.S., varying particularly our could closures and across in store of rest temporary mind remain exclude into as the heading and comparable permanent store closures the the XX or the due contiguous close to December Keep sales more in impact pandemic. locations January. of days in and

our how I actions. a our I on and strategy to especially we're estate de-densification optimize efforts real over-stored wanted fleet, approaching markets further conclude, Before and to elaborate further little

we Looking capabilities, EBITDA very year improvement experience store expirations. lease of stores in business. to had at little that have And a and XXX in in with on have over experience we digital enable with over desire with our and across to hiring and These see XXXX XXXX customers' extensive nearly to have come over the combined, optimize improving our will us omni-channel the based had XXXX no GameStop investments do will XX at coupled with We've XXXX little our has stores very capital in terms timeframe digital our XXX efforts cost importantly coming and the With so. close to or further that COVID-XX flexible two. spent XXXX, platforms. opportunity impact including to almost close professionals that a to fleet

generated and you quarter holiday, our are We launches. summary, we're for by our objectives will excitement during the call. fiscal by and update earnings and further year-end a on In console fourth off buzz associates the great these energized conference to start

We drive software newness have out consoles and that playing long we said our business, and that see now. and the

we due to was today meaningfully it our all strategy. focused than more intently remain in and market for of our work of have for will entertainment optimization architecture. the a our But XX financial to to services organization initiatives and space. future a in we're nice offering equally broader are Reshaping on we effective achieve a and and components have tailwind, GameStop reach now ago, a the short that continuing range is improve we believe company place months on transforming part hard GameStop products benefiting focused streamlined the efficient be term, right our While the of games from as stabilization teams In and this done goal.

take poised growth through phase will of services, as ecosystem bring questions in beyond. title I expected experienced As improvement the a on to slate, our operator well and and led extensions will as into console we generation software exciting to result, believe, expansion category the capitalize as now over may product and new profit flow many have. we that our by strategy launch and XXXX sales both the turn you we'll the significant we're and call we transformation the any nine of

Operator

Thank you.

first session. comes Please Our question. We [Operator with our Jefferies. your Stephanie Instructions] will now proceed having from Wissink question question-and-answer be with

Ashley Helgans

Hi, for Thanks And taking this should XXX The you've for a Ashley Steph expect On Wissink. SG&A the reaming sources data did of how is it quarter quarter, million cost like then on performance quarter, the forward? industry about what what benchmark for questions. reduction, third-party address? going by running pacing been your just our NPD? to Helgans are And Thanks. we in -- buckets how to figures

George Sherman

Ashley, as SG&A for Hi, for to we respect the virtually every With you addressing address, look, of SG&A, mean, business. several continue Yes, in quarters thanks to -- again know, I questions. now facet

of aspects DC, it really we've corporate forces, both the lot any to offline, it the our all the A G&A. be stores labor productivity entirety system. seen is of coming contribution going a of So the costs historically of our stores for and expenses we're in of is it's removing quarter, lot out -- from different of of because not as that won't

everywhere. it really is So,

And know So, much change don't on based the was? I'm that's very all sorry, at going that to of question second part the history. I

Ashley Helgans

industry benchmark was second quarter, Yes, did NPD? how figures just on part you. to like helpful, question of you in That thank the was but performance the the the

George Sherman

I'm next and cycle then exactly at we end But the importantly, think mean, we here we're more I our first comment next four of will as the exactly I one how this look, set I quarters is, mean, I cycle. go and was And look, our met just of on price when a not if last expectations. journey, line the a expectations. just then happens again, these a we sure we think, they competing with said, benchmark And go what on not summer the to the at of representative be Yes, out point. what back transition, end quarter back, in we year, got you saw

So most now. I is are launch these a this into again, point quarter of we think the very indexing balance, consoles. well, important but is behind think, the launched here it's timeframe November and I third that And the we the importantly, as

the think is focused forward. transition, moving I message laser on that that's made and we're critical that we've today

Jim Bell

from the Yes, we that's --- I that, going end experience think mean, hardware I the got during proper end software affected we're in pandemic. of this to we're of moved some knew had of I'd we the to kind we've QX, We titles quantity. cycle without that QX add voidance to I in in we any all generations the place as some and are at think right. is

for store going So, a to especially I less mean, across impact very the country, feel the particularly we of waves become as specialty comfortable, breakout clearly that, shoppers purchase. less, as

Ashley Helgans

XX% stores? squeeze the Thank you. the representing quarter, business from in online one more. just could is E-com how And I now fulfilled if much of next in

George Sherman

what stat -- consumer based fluctuates. is we've that's it it's But because supplied. that this actually suffice actually is to the demanding. not important a it's say, on Yes, it And

into when buy by Again, And traffic absolute so, letting footfall up product when pick from what from shift the That's consumer them. is I a That's traffic in consumer and we element to box we they pure a think it's itself to omni-channel it's direct fluctuating. deliver exactly a retailer digitally-led standpoint. frictionless, important. the what POS store want mean pick the online, store if or or

Operator

you. Thank

your question next Baird. Robert proceed Colin W. question. with with from Our Sebastian Please comes

Colin Sebastian

with with lot and made being controls. expense progress mean, a clearly e-commerce I of

shrinking pertains could like transformation Because bit to the it to you wonder, the terms some question. base? plan, to at what in outlined a fair the was and letter value, store board? how as it digital my there's That's shift differs I So overlap first provide face if the first and context from of the in of seems this

George Sherman

where that What the and look today. feel the place. comment stability financial We on good Reboot as about see today and our have at measures taken we I'll been it, only we progress, business quite are we

represents cash million mean, with XX% returned million. million more about Company. $XXX that's a the that's We reduced something throughout that's debt which Reboot, over about $XXX of the period last buybacks, shareholders been $XXX of I we well than long-term through quarter continuous same process. the year. by the to Over pretty the quarter trend. We've And ended been Reboot

I allow part capital rate million, that of through Reboot an then we've of is I beginning to Just quarter, Unfortunately, and And this of does. been that's prior the the run began pandemic what used made getting where very to to that reduction progress it mean, he working $XXX be. ago, tremendous. much done on very that's of to months important cannot SG&A overstate. at XX that your has be us yes, seems question, navigate

standpoint. of So, behind. sales. in economic we sure, for on front digital the an financial progress stability and clearly nice We on or behind we've mean, stability made from were I good, e-commerce of terms digital were penetration

having that's spiking important demand as gaming to not then it is. is the of very, options, And flexible very of ahead, is, console for better to just a higher of are quickly, kind about do, long own proprietary terms behind be to are both To entire very the XXX% level while e-commerce all certainly capability at We're in and very come QX our least still human is that, very, verticals. of credit in cards, terms investments console and we've We up how I candid But way capability, long, to terms the at as gaming made the customer expansion have made, than defined have in to retailer. this it. call that really penetration so platforms payment a and various shop. periods. clearly to the alternatives of We capital and peak launches looking for the that disturbing community driving The it during and unprecedented but purely working work generation to technology. we've us

see So, Day very that on we're being Day. sales to in closed decision and despite of on to being glad close Thanksgiving Thanksgiving XX.X% comfortable

the We that store then course during comments progress good the both of really digital progressing category a Jim on optimization are mentioned our wide that and fleet I and first have omni-channel work. well expansion

good So, the where about next we are and look poised back, pretty we work. for are phase we of feel

Jim Bell

optimizes a September That's leading last Reboot I that That through what in got finer data and how right stores. we've August, mean is just with here on digital technology to with e-commerce investments We point was it. put that when Reboot launched timeframe our the program. evolution, as in a ecosystem. the we to year, frictionless with done. footprint build leading for Again, technology, exactly launched digital the our in balances launched it a well second as pillar foot we the that

So, that's real it. and we I point George made, the been did, think strides some against we've making

Colin Sebastian

Thanks.

helpful. In release, around some providing in growth that's So the there's to XXXX. reference commentary

So sales if I else? volumes something or clarify, year just that's to specifically wanted referencing next

Jim Bell

year. It's absolutely referencing sales volumes next

Colin Sebastian

Okay.

George Sherman

And two that. I say, to part response

First of initiatives place. all, we in growth have

of is launch not the console Second QX phenomenon. all, a

and into great I mean, there'll the demand next be entirety know, As think beyond. carry I forward of all year you

Colin Sebastian

year? the Okay, fiscal have and expected then lastly. Do at the target end cash of the balance for you

George Sherman

haven't that the say we I but we've put trajectory on. out just it consistent with will been there, Yes,

Operator

Thank you.

Bank Please Reuter with Our next question. America. William from of question with comes proceed your

William Reuter

just two had quick ones. I Hi,

is question this think The asked was first I and way. the don't

in In expectations? the your terms of November performance, it line with was

George Sherman

a by expectations. Again, on out Thanksgiving. we took in was with certainly chunk closing Yes, line of that knowingly

the it's fair work. say in think might not to prep that you environment, sometimes sales is see compression that this I

we to guess and that And for was safety. an going that investment people be a into So in second we that moment. don't knew our

make it that expectations. in you is if yes, line change, our So with

William Reuter

corporate consider to Would general I program? that under Okay. terms stocks you the shelf, And new saw issuing debt of then, repay in that purposes. you mentioned

George Sherman

immune that see you And not back and the sheet. here be same term 'XX, will by over to of reduced we're million is going and debt -- this the have long is they'll XX including, month a And coming intent. in to to world, intent plus the execute minus. to balance The over timeframe, March debt absolutely on continue the of to ongoing the impacts There in to timeframe, $XXX roughly this marketplace of lot pandemic, bolstered optimize in XXXX optionality regard, even work of going or that flexibility that's that we've early today, it's own all same the Friday million, look, strengthen $XXX long-term our strategies cases we unknowns right. until our in if on as we're simply businesses, have done, not our period. levels go our respect and that, that across No, with flex

over shareholders. to returned $XXX also We million

pragmatic helps flexibility to goal and run the focus to look, continue flexibility. is maintain that business Hopefully on do think, and have we our the running make I anything sure you. be business, that the than So intention optimizing capital but we with to no also very other

Jim Bell

absolutely. need need don't we Certainly, Yes, We it. don't it.

George Sherman

notes. mentioned, And of March remaining of the voluntary first million the Friday's I early last 'XX as of redemption $XXX

William Reuter

pass I'll Thanks Great, to others. so much.

George Sherman

Thank you.

Operator

Thank you.

Group. Our comes Advisory question. next proceed question Please your Feldman with Telsey with Joe from

Joe Feldman

prior your thoughts backlog single heavy allocation every very I there out you plant We still, With what your I compare sold did period? and there's are got. rest produce still cycles? of regard you assume how come that that to know unit said mean, the and a to more. through the allocation presumably the Sony consoles, they on Is has

any that? can share So you thoughts on

George Sherman

Yes.

don't that Joe, I unbelievable, demand of end insight. mentioned. the you think been we has see And that any as

competitive I calls say of answer is So with want certainly, between mentioned I demand and it. pieces these I've from the fabulous has set think terrific allocation on past Any OEMs this of the get the direct console themselves. always to are changed is really we will more. we the The technology. launches for evolution that consumer

but allocations what a about the which you playing look So winning we're that tells meaningfully, our time well. objective we're was last around, bit versus like and

we and in all think I part point attach one along premise of our a us, area for differentiation it's of differently. So is been

point a a expect we terms you it of when accessories, and level and So, us look to we recognized, for in party differentiating seen allocation. and we at be that's for differently attached some software, going of first forward reward that been have

Joe Feldman

some And the million, just then I fourth that cash its to presumably, but you more regard question in another XXX balance, yes, quarter. mean, I of generated the with restricted, know

or understand are with thinking pandemic. cycle through rough. the guess, But I you about to getting months couple we're allocation of how I I or the so next cash say, Let's to we've are to stock going that. more cash this be you point? talked back coming return buy at year, know were usage to are the hoping this in going people that

think should that we how curious forward? about going I'm guess I So

George Sherman

a allocation, like think what certainly we're Thanks, ultimately, right with we our job Joe. that capital mean, debt? the the rest XXXX every The ultimately March for said, short the of returned investment proven year level in that, XX. get we'll I business. of is growth the and it continue future down off then means And these a answer of rapid We the done is, of optimum That's transformation of after capitalization that, outside find to is to which and paying accelerating it one business also think point, bring to share, the capital do last the And the profitability. return investments well the return of of that approaching is over in we’ll in as first starts of if the to the more those I fine the I nothing's table. those fashion is which shareholders, that. as again, consideration on And million balance $XXX table. balance always to do we've

looking find the capital of allocation. always are We balance to optimum

Jim Bell

And few that obvious timelines exact you by a nor we are, encouraged now. don't And know means more the does add obviously a or all environment know but point. months don't underlying what just at impact see to like protocols kind matters we We're of the ahead. certainly vaccine, for of this just right anybody the we more

the insight to have we're guarded going future. be is is no there's future for end look particular we into that something the be to with about something So indefinite at we yet. This dealing date

Joe Feldman

luck this holiday Thanks with season. and good

Operator

you. Thank

Suisse. from question. Credit comes with question next with Please Our your Sigman Seth proceed

Seth Sigman

language follow And the I to on to commentary. the QX want confirm I wanted here. up just

confirm, as you I just release year-over-year the to in growth. profitability sales growth talked well? So about positive guiding are you to want year-over-year

George Sherman

anything, I that. was been and specific comment straightforward fourth to profitability we've on the we're to think again, guiding quarter. to growth clear, not it's, Again pretty not guiding be just And We're in to anything. the

Seth Sigman

saying Your grow growth, sales confirm is sales a to there's you're in will year-over-year to saying year-over-year profit I year-over-year and profitability. are addition in, mean, you comment about I'm sales just trying growth? year-over-year

George Sherman

Yes, the quarter. was fourth it notation was just for

Seth Sigman

fourth I'm the quarter for Yes, asking.

George Sherman

that's Yes, correct.

Seth Sigman

Okay, profit so growth. year-over-year

the but given unfavorable is, up to profit mix. negative Obviously, you going mix have question you're be are do related going well? to as the some mixed hardware, then So to up the of you gross impact would be expect Comps have here.

really So gross it from the profit coming up or savings? is cost

George Sherman

you bottom overall bit then a A year. your little a line a bit it lot rate, volume take of optimized result more but of flow line the was as the as through, also through both, we're gross from so of expense That's than dollar, gross you get a flow advantage talking of look, structure. because the about little last profit dollars, top

Seth Sigman

interesting. Okay,

the all sort I'm follow-up you you what or incremental the And per-NPD. regain initiatives, the that's reasons look that feel highlight? be share for just or like, as with clearly is the think question most just of out do then of months the curious, Okay. did lagging share, so? of then, over be anything to been you And progressing? even else trail one to next going XX would industry what would that course, I'm to your rate seem on curious, you ecommerce You earlier, it's a like feel growth question market though causing

George Sherman

a And immune of general. way, applies And weren't. any mortar our in Yes, for during a a stores, in as shopping of that shape, we open guarded pandemic, where across retail aspect footfalls think environment, look, the it where share. of significant and obviously, are some the that periods where QX, manner. brick you've are course the competitive there or had lost to a close for in business We've during there's fact that competitors we reluctance, there's aware I the to our decrease got we very we're business certainly us not had certainly some situation of we've were

get think I shopping you've multiple purposes. to GameStop a you've general for got prescribed and elsewhere to trip gaming, trip So a got

in. I factored think probably is that

On marketplace, releases. the the flip we newness excel, market software in when those lead for in side, to tend we game those releases again, share there's new

forward. share We So we're to believe be going that back going begin is claw to a our strength. actually in position that to market

We've full longer. now and stores closure as we on but ecommerce, we're increases there still back suite through the some impact that gained, the a omni-channel there's for aspect of while significant lovers As customers cycle on those in be certainly offer now. get able and we business our careers right will the to of a mortar and brick

Jim Bell

the forward. our expert gain big of consultation we huge the gaming reason advancements And important at head a I that in you cycle, of market we points for piece, the look just at share our X, expectations associates, Gen is points those share technology. a is little beginning that of I again, Gen comment the at the mean saw XXXX to the cyclicality XXXX market and back of bit they're for one had couple of technical we stores. that this But a X the the in in you'll a transition more reason reason, with the of and end if period, the cycle, tend and share that's lose market

Operator

your question. Our Please of next Nagle question America. comes proceed from Curtis Bank with with

Curtis Nagle

on of rest And the wanted to quarter when was, how in to obviously digging just November XX.X about the comment out? launched. the the just continue comp quarter think November. how was I the I about it plays

going see into material November, it lot and will to in I websites. stores brought the least a quarter the where to it's think traffic only likely industry of at a sell-through And due the shortages. be

have So months, have driver that just traffic? you those setup don't or I at reversal traffic comps likely in think your Do think. What's where How the you January, positive? a materiality? of December for are again, supply, about about ton think peers see we and least any and where few you first think to you the do

Jim Bell

pandemic retail take Yes, of because mobility. effects, all, unknown I what the time, off think, components any a we've affects seen of it time potential that table, let's first and again,

no outside that, the simple again, of execute month assume November. impact knows a that in not just let's So in that, quarter, very to the off fourth couple fact of the And of of it weeks take is this is a table. the we're here continuing one

fourth to not not certainly So the clear, and that's be either. this it's quarter what isn't

earlier, said here this a George As just beginning is and multiyear evolution this is the

George Sherman

heard Yes, global December. about look mitigating at I you've supply it know. that there's is on, to have been as going and newness on you've is certainly but impact And every a factor, fact. mean, December, issues a you it call be we in on chain likely

traffic will driver that a of two us. Cyberpunk big We are release in will XXXX, is believe coming have there this. a the month December. called events up certainly which days, we for And continue That other that in drive

Jim Bell

fact resonating not that and all so miss to with added advantage. well consumers the both in delivery options these to want options, have playing don't much an are I we and payment us our incredibly flexibility, Again, giving customer

full omni-channel this again, So execution. of a advantage how is take you

move to we be So well. that, those business as beyond as of through our part are and continuing in December

Curtis Nagle

And constraints our the well? software Maybe trend across then little how XQ? just guess, consoles? that on portion hardware commentary doing? And how over of business is quick supply of as use bit given both segment boost does a just follow-up. current the next near-term, And how and Any a seeing I that gen is performing

Jim Bell

side, hardware third quarter for mean, you've as almost. on again, should lower the Yes, expected, got I the supply be

I mean, equation. mean stores not right? our intake. As just we go and a to are that's forward closed, I taking we're in pre-owned by hardware, natural ability When is what our

However, you engagement so with and And as we of navigating product OEMs forward that think through that customers prior as because product that different we're we're do, a this is product, people there's our marketplace. though, is quite with making prior well. I big around, part want a of positioning gen in lot time launch, our a what's pre-owned if a go are not and gen demand anymore, the critical, that's this

your really We go that. get to shop are

George Sherman

again, Yes, last I reason, that the issue We're just for little emphasize time point. hardware pre-owned a go back bit, and in is pretty bullish intake that just on self-explanatory.

consoles. events launch then we for We have and new generation next have pre-sales

get You're to my get my console. new I until not going console old

a those right delay of where in construction we fulfillment are a So demand happening. that from bit renaissance very so environment does. gaming for, we And generation them absence high of it kind there's really but inherent be that factor phase, of we going and remain consoles actually for pre-owned preorders, a the And the in we a working with have is an then think the And this can can out now that's them. older in there. but

Operator

to to the Thank at any for floor this questions time. George closing turn further you. remarks. Sherman no I'd over There are like back

George Sherman

the close Yes, then and let we'll to Jim quick me one call. make comment have off

Jim Bell

I wanted Yes, just your to call attention.

this we website. IR quarter, transformation, to making as we're slides added some we our This added

for of to your that our all layout call So, iterate those attention you to continues and at I'll this journey.

George. reference So, to take a those please

George Sherman

great our quite you It's I cadence year. Yes, unusual thanks a an kind you layout to communications safe a and Hope been holiday. want forward. of going everyone, a obviously have to wishing happy end it.

at conference holiday virtually Thank very ICR all more year-end will details much. and early provide you our our regarding and you following results happening January work January We results. fourth in strategy then the with our and in again sales quarter

Operator

today's conference. Ladies this and web concludes gentlemen,

may You lines great time. and disconnect your this participation have you a for now Thank day. at your