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Gamestop (GME)

Participants
Eric Cerny Investor Relations
George Sherman Chief Executive Officer
Call transcript
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Operator

Greetings and welcome to the GameStop First Quarter Fiscal 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Eric Cerny, Investor Relations. Thank you, Mr. Cerny.

begin. may You

Eric Cerny

cause welcome in assumes filed and A conference to and issued the no which be Investors first fiscal and factors statements Harbor that release regarding earlier quarter subject earnings from GameStop Safe differ of Thank Any in the discussed the with expectations. This release can website. forward-looking to reconciliation information. the the in call earnings earnings measures on the such could uncertainties and information call. various be obligation statements, in section results our will XXXX reports any to or with to today materially considered these risk other of you should non-GAAP risks as update financial the GameStop’s as actual conjunction include found statement are call SEC. statements discussed statements and forward-looking cautionary well

George discuss this Joining On a me today be Sherman. of Please followed the business strategic review session George our note call, of by will Q&A the financial at today’s initiatives, is doing we not GameStop’s results. end and Chief Executive call. that Officer, a will

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George Sherman

Good earnings from year both first our call. thank a afternoon XXXX start and operations to the a you quarter GameStop perspective. to fiscal for joining and strong is off sales

Throughout Chief increase include: ended These more the Chief year. to technology XX% also leadership talent we on by million our year-over-year retail Chief the grew compared and with took balance total Technology First a our a align and and million Officer. steps number previously adding we Officer, quarter, to than Officer the appointing stated of team with sales an period cash quarter Growth senior priorities. first Operating of steps in that $XXX sheet, last $XXX

and chain e-commerce, Amazon, and these additions hires Google other experience fulfillment. have across Chewy. new brand, and We proven as supply a senior of number such made backgrounds Each also merchandising, of companies from

Second, we our April strengthened more raising than net balance program. company’s by the further $XXX proceeds in million from ATM sheet

our senior eliminated debt voluntary our notes. also long-term early with XXXX of redemption We the

our Pennsylvania. fulfillment facility this our year, new which XXX,XXX is distribution we a of to enhance square on by quarter Coast. expanded foot by fulfillment in network the adding order the East This Third, expected capabilities be operational York, fourth will center,

a also X of announced to common intends purposes general a sheet. The shares balance further as corporate well expand a taking the company extensions on and TVs, to evolve Lastly, technology continue simultaneously our gaming PC adding monitors, world-class use as gaming, emerging to ATM prospectus stock. the just new we up to by million few. we for Today, such name computers, and filing intend offering growth a offering initiatives cycle. to the We infrastructure capitalizing strengthening to investing while natural game build net tables in offer and for business continue any our for to console product steps as proceeds

in joins a with Australia background to e-commerce this Furlong, Matt I permanent as Matt proven is take results Mike CFO incoming financial significant of release achieve on led I’d region. business has afternoon’s our decades and Video. Before recently quarter, the oversaw for also leader scale Procter brand as review we opportunity CEO, we the Chief his our the and company CFO, his focus, of where willingness nearly a want of North right Recupero, return at and CFO market as I going forward a weeks. Accounting Diana CFO. retail responsibilities to on CEO that at transitions organization. Mike Mike Diana tone Prime two take most finance helping her tenure a leadership delight he interim Consumer firm like understanding the within an for understanding and and Matt begin set and and once press joins. to exactly working Amazon, the additional us roles senior & hiring His recently ensure His customers. in Jajeh announcing Mike to officially seamless the impressive a will look where lines from most work growth her a organization to career. spent comment incoming variety guidance what of this thank and experience a he during how to growth American where forward. across from her of phase. atop also Amazon strong coming also to finance I time shifting will ethic Officer He Amazon, permanent to the Gamble, role began he’s CFO. brings to and held the with intensity is need from of

Now, sales period. prior turning in net for increased to year quarter $X billion financial XX.X% $X.X our billion to the to results, the compared

mix $XX.X decline SG&A million, a basis $XX.X Overall, XXX $XXX.X Importantly, basis was of increase expected due de-densification the the in the year continued and X.X% adjusted strategic nearly basis. for lower a the Europe reflecting The sales first costs, declined compared XX.X%, and reported SG&A year-over-year year to in in quarter $XX.X XX% an the an Adjusting of we versus due expense $XX.X expenses primarily the From our operating an million to driven efforts an severance, was quarter million perspective, $XX.X transformation quarter closures in an from quarter loss other was in Adjusted of year $XXX We were during or store of million loss with and in by period. the prior XXX decline quarter. on the improvement SG&A to sales. of an in tax point million last margin million million in SG&A loss expense the reported COVID-XX leverage. which of points a loss year. percent year X.X% the to our an compares and quarter. XX $XX.X of prior or Income compared gross points our income a last first first sales growth first $X.X million, roughly operating reduction to down XX.X% first prior percentage achieved tax this margins to operating in reported pandemic. fiscal fleet million global reflects of were store

million we income and tax jurisdictions We the by effective was mix of quarter rate first net in a diluted share compared million well per per of the to or in operate. $XXX.X which of of allowances loss loss as across net recorded the share or the impacted Our a $XX.X as year valuation prior quarter. earnings diluted periods $X.XX $X.XX prior for loss reported X% in a

adjusted quarter, globe. operated At across to strategically million diluted Our $X.XX compared of adjusted stores de-densifying of net first quarter. X,XXX net global to closing first continue quarter a million in net we loss the XXXX loss on share $XXX.X per share $X.XX a fiscal the fleet, In stores our or store loss quarter. end, total per the diluted or was $XX.X in focus the we of XXX

the company’s and million and $XXX.X a the under no first low the of year. short-term and response redemption Capital million, U.S. long-term voluntary related to million during to than an year $XXX to our notes due $XXX.X cash an of of million reflect quarter, of to of credit the facility. Act outflow debt CARES the the quarter compared us asset-based in operating loan $XX.X French the debt through were $XXX.X we expenditures quarter the cash flow paydown and outflow the government, of from balance the no interest $XXX the of end $XX.X by of million $XX.X same ended is were debt, million, revolving had quarter of equivalent due Overall borrowings the quarter activities restricted senior of higher levels end cash the the Turning the offered from the year. of XXXX notes increase reduced the to quarter, facility, in compared asset-based of early million At to credit last sheet. last last which million. the an senior million was with $XX.X $XX.X first We the $XXX XXXX, period of XX% redemption COVID-XX. of million In for million in revolving first

pandemic emerging we and business guidance. of post-pandemic terms annual We the the and In our elevated sales outlook, remain about console optimistic earnings both future. uncertainty, cycle our providing to due and risk specific not are remain we and recognize

our positioning which with customer in We were superior prioritize start long-term are customer sales growth the on GameStop providing strong pleased We up year remain differentiated and as we a to delighting experience. May, approximately and XX% for and year-over-year. our focused

speaking want very time CEO, given the navigating you Finally, to last this what past accomplished have proud of with over we the as my liquidity the possess including GameStop’s strong X share years, gaming collectively pandemic I’m growth. and the is privilege members that tremendous company positioning and team been so lead for an and many dedicated for to It’s improved with a industry. who platform talented passion I

stability I this de-densifying returning belief our and growth. for us. of who forward I us their shareholders company including opportunity business, support footprint, our Thank have an want working thank to our the reducing again bring to look by GameStop. newly so and Board strength your for take with demonstrably and debt, your exhibited you appointed We cost also have and helped to team to customers of interest store in in and support for amazing our their going forward. leadership group and

Operator

This concludes today’s conference.

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