GameStop Corp. (NYSE: GME) (“GameStop” or the “Company”) today
released financial results for the fourth quarter and fiscal year
ended January 28, 2023. The Company’s condensed and consolidated
financial statements, including GAAP and non-GAAP results, are
below. The Company’s Form 10-K and supplemental information can be
found at https://investor.gamestop.com/.
FOURTH QUARTER OVERVIEW
- Net sales were $2.226 billion, compared to $2.254 billion in
the prior year's fourth quarter.
- Selling, general and administrative (“SG&A”) expenses were
$453.4 million, or 20.4% of sales, compared to $538.9 million, or
23.9% of sales, in the prior year's fourth quarter.
- Net income was $48.2 million, compared to a net loss of $147.5
million for the prior year’s fourth quarter.
- Inventory was $682.9 million at the close of the period,
compared to $915.0 million at the close of the prior year's fourth
quarter, reflecting the Company’s ongoing focus on maintaining a
healthy inventory position.
- Cash, cash equivalents and marketable securities were $1.391
billion at the close of the quarter.
- Long-term debt remains limited to a low-interest, unsecured
term loan associated with the French government’s response to
COVID-19.
FULL YEAR OVERVIEW
- Generated net sales of $5.927 billion for the fiscal year,
compared to $6.011 billion for fiscal year 2021.
- Increased full-year sales in the collectibles category, which
is an area in which the Company continues prioritizing long-term
growth.
- Completed the majority of implementations and upgrades related
to the Company’s infrastructure, systems, shipping capabilities,
and online and mobile platforms.
- Initiated cost cutting initiatives and headcount reductions
over the course of the year to increase operational
efficiency.
- Established an equity incentive program for store leaders and
tenured associates to increase their compensation and strengthen
alignment of interests with fellow stockholders.
- Set a go-forward strategic direction focused on efficiency,
profitability and pragmatic growth.
CONFERENCE CALL INFORMATION
The Company will host an investor conference call today, March
21, 2023, at 5:00 p.m. ET to review its financial results. The
phone number for the investor conference call is 1-877-407-6169 and
the confirmation code is 13736983. This call, along with
supplemental information, can also be accessed at
https://investor.gamestop.com/. A recording of the conference call
will be made available on the Company’s investor relations website
for two months.
NON-GAAP MEASURES AND OTHER METRICS
As a supplement to the Company’s financial results presented in
accordance with U.S. generally accepted accounting principles
(GAAP), GameStop may use certain non-GAAP measures, such as
adjusted SG&A expenses, adjusted operating income (loss),
adjusted net income (loss), adjusted earnings (loss) per share,
Adjusted EBITDA and free cash flow. The Company believes these
non-GAAP financial measures provide useful information to investors
in evaluating the Company’s core operating performance. Adjusted
SG&A, adjusted operating income (loss), adjusted net income
(loss), adjusted earnings (loss) per share and Adjusted EBITDA
exclude the effect of items such as transformation costs, asset
impairments, store closure costs, severance, as well as divestiture
costs. Results reported as constant currency exclude the impact of
fluctuations in foreign currency exchange rates by converting the
Company’s local currency financial results using the prior period
exchange rates and comparing these adjusted amounts to the
Company’s current period reported results. The Company’s definition
and calculation of non-GAAP financial measures may differ from that
of other companies. Non-GAAP financial measures should be viewed as
supplementing, and not as an alternative or substitute for, the
Company’s financial results prepared in accordance with GAAP.
Certain of the items that may be excluded or included in non-GAAP
financial measures may be significant items that could impact the
Company’s financial position, results of operations or cash flows
and should therefore be considered in assessing the Company’s
actual and future financial condition and performance.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS -
SAFE HARBOR
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are based upon management’s current beliefs,
views, estimates and expectations, including as to the Company’s
industry, business strategy, goals and expectations concerning its
market position, strategic and transformation initiatives, future
operations, margins, profitability, sales growth, capital
expenditures, liquidity, capital resources, expansion of technology
expertise, and other financial and operating information, including
expectations as to future operating profit improvement. Such
statements include without limitation those about the Company’s
expectations for fiscal 2023, future financial and operating
results, projections and other statements that are not historical
facts. Forward-looking statements are subject to significant risks
and uncertainties and actual developments, business decisions,
outcomes and results may differ materially from those reflected or
described in the forward-looking statements. The following factors,
among others, could cause actual developments, business decisions,
outcomes and results to differ materially from those reflected or
described in the forward-looking statements: economic, social, and
political conditions in the markets in which we operate; the
competitive nature of the Company’s industry; the cyclicality of
the video game industry; the Company’s dependence on the timely
delivery of new and innovative products from its vendors; the
impact of technological advances in the video game industry and
related changes in consumer behavior on the Company’s sales;
interruptions to the Company’s supply chain or the supply chain of
our suppliers; the Company’s dependence on sales during the holiday
selling season; the Company’s ability to obtain favorable terms
from its current and future suppliers and service providers; the
Company’s ability to anticipate, identify and react to trends in
pop culture with regard to its sales of collectibles; the Company’s
ability to maintain strong retail and ecommerce experiences for its
customers; the Company’s ability to keep pace with changing
industry technology and consumer preferences; the Company’s ability
to manage its profitability and cost reduction initiatives;
turnover in senior management or the Company’s ability to attract
and retain qualified personnel; potential damage to the Company’s
reputation or customers' perception of the Company; risks
associated with new digital asset products and services; the
Company’s ability to maintain the security or privacy of its
customer, associate or Company information; occurrence of weather
events, natural disasters, public health crises and other
unexpected events; potential failure or inadequacy of the Company's
computerized systems; the ability of the Company’s third party
delivery services to deliver products to the Company’s retail
locations, fulfillment centers and consumers and changes in the
terms the Company has with such service providers; the ability and
willingness of the Company’s vendors to provide marketing and
merchandising support at historical or anticipated levels;
restrictions on the Company’s ability to purchase and sell
pre-owned products; the Company’s ability to renew or enter into
new leases on favorable terms; the potential monetary losses, user
disputes, reputational harm and regulatory scrutiny from any
hacking, social engineering or other cyber attacks in connection
with digital assets; the potential failure or inadequacy of the
Company’s or its third party partners’ systems or blockchain
networks related to the Company’s digital asset products and
services; the unique risks and challenges related to content
moderation and control from peer-to-peer NFT marketplaces;
unfavorable changes in the Company’s global tax rate; legislative
actions; the Company’s ability to comply with federal, state, local
and international laws and regulations and statutes; the evolution
of government regulation related to the Company’s business
initiatives; potential future litigation and other legal
proceedings; potential legal, regulatory and other actions arising
from the Company’s digital asset products and services; potential
investigations or litigation arising from the Company’s digital
asset investments, products or services; potential exposure to
litigation arising from violations of law by third parties using
the Company’s digital asset products or services; potential
unfavorable development regarding treatment of digital assets under
U.S. and foreign tax laws; the Company’s ability to comply with
anti-money laundering and sanctions laws in connection with its
digital asset products and services; volatility in the Company’s
stock price, including volatility due to potential short squeezes;
continued high degrees of media coverage by third parties; the
availability and future sales of substantial amounts of the
Company’s Class A Common Stock; fluctuations in the Company’s
results of operations from quarter to quarter; the restrictions
contained in the agreement governing the Company’s revolving credit
facility; the Company’s ability to generate sufficient cash flow to
fund its operations; the Company’s ability to incur additional
debt; the Company’s ability to implement a new ERP system; the
Company’s ability to maintain effective control over financial
reporting; and the effects of recent developments on the price of
digital assets and reputation of the digital asset industry.
Additional factors that could cause results to differ materially
from those reflected or described in the forward-looking statements
can be found in GameStop's most recent Annual Report on Form 10-K
and other filings made from time to time with the SEC and available
at www.sec.gov or on the Company’s investor relations website
(https://investor.gamestop.com). Forward-looking statements
contained in this press release speak only as of the date of this
press release. The Company undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by any applicable securities laws.
GameStop Corp.
Consolidated Statements of
Operations
(in millions, except per share
data)
(unaudited)
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
Net sales
$
2,226.4
$
2,253.9
Cost of sales
1,726.6
1,875.7
Gross profit
499.8
378.2
Selling, general and administrative
expenses
453.4
538.9
Asset impairments
0.2
6.1
Operating earnings (loss)
46.2
(166.8
)
Interest (income) expense and other,
net
(6.2
)
0.9
Earnings (loss) before income taxes
52.4
(167.7
)
Income tax expense (benefit)
4.2
(20.2
)
Net income (loss)
$
48.2
$
(147.5
)
Earnings (loss) per share:
Basic earnings (loss) per share
$
0.16
$
(0.49
)
Diluted earnings (loss) per share
0.16
(0.49
)
Weighted average common shares
outstanding:
Basic
304.3
303.6
Diluted
304.5
303.6
Percentage of Net Sales:
Net sales
100.0
%
100.0
%
Cost of sales
77.6
%
83.2
%
Gross profit
22.5
%
16.8
%
Selling, general and administrative
expenses
20.4
%
23.9
%
Asset impairments
—
%
0.3
%
Operating earnings (loss)
2.1
%
(7.4
)%
Interest (income) expense and other,
net
(0.3
)%
—
%
Earnings (loss) before income taxes
2.4
%
(7.4
)%
Income tax expense (benefit)
0.2
%
(0.9
)%
Net income (loss)
2.2
%
(6.5
)%
GameStop Corp.
Consolidated Statements of
Operations
(in millions, except per share
data)
(unaudited)
52 weeks ended January 28,
2023
52 weeks ended January 29,
2022
Net sales
$
5,927.2
$
6,010.7
Cost of sales
4,555.1
4,662.9
Gross profit
1,372.1
1,347.8
Selling, general and administrative
expenses
1,681.0
1,709.6
Asset impairments
2.7
6.7
Operating loss
(311.6
)
(368.5
)
Interest (income) expense and other,
net
(9.5
)
26.9
Loss before income taxes
(302.1
)
(395.4
)
Income tax expense (benefit)
11.0
(14.1
)
Net loss
$
(313.1
)
$
(381.3
)
Loss per share:
Basic loss per share
$
(1.03
)
$
(1.31
)
Diluted loss per share
(1.03
)
(1.31
)
Weighted average common shares
outstanding:
Basic
304.2
290.4
Diluted
304.2
290.4
Percentage of Net Sales:
Net sales
100.0
%
100.0
%
Cost of sales
76.9
%
77.6
%
Gross profit
23.1
%
22.4
%
Selling, general and administrative
expenses
28.4
%
28.4
%
Asset impairments
—
%
0.1
%
Operating loss
(5.3
)%
(6.1
)%
Interest (income) expense and other,
net
(0.2
)%
0.5
%
Loss before income taxes
(5.1
)%
(6.6
)%
Income tax expense (benefit)
0.2
%
(0.2
)%
Net loss
(5.3
)%
(6.3
)%
GameStop Corp.
Consolidated Balance
Sheets
(in millions)
(unaudited)
January 28,
2023
January 29,
2022
Current assets:
Cash and cash equivalents
$
1,139.0
$
1,271.4
Marketable securities
251.6
—
Receivables, net of allowance of $2.2 and
$3.3, respectively
153.9
141.1
Merchandise inventories
682.9
915.0
Prepaid expenses and other current
assets
96.3
271.3
Total current assets
2,323.7
2,598.8
Property and equipment, net of accumulated
depreciation of $1,006.8 and $1,029.8, respectively
136.5
163.6
Operating lease right-of-use assets
560.8
586.6
Deferred income taxes
18.3
16.3
Other noncurrent assets
74.1
134.0
Total assets
$
3,113.4
$
3,499.3
Current liabilities:
Accounts payable
$
531.3
$
471.0
Accrued liabilities and other current
liabilities
602.3
668.9
Current portion of operating lease
liabilities
194.7
210.7
Current portion of long-term debt
10.8
4.1
Total current liabilities
1,339.1
1,354.7
Long-term debt
28.7
40.5
Operating lease liabilities
382.4
393.7
Other long-term liabilities
40.9
107.9
Total liabilities
1,791.1
1,896.8
Stockholders’ equity
1,322.3
1,602.5
Total liabilities and stockholders’
equity
$
3,113.4
$
3,499.3
GameStop Corp.
Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
Cash flows from operating activities:
Net income (loss)
$
48.2
$
(147.5
)
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation and amortization
14.2
24.0
Gain on sale of digital assets
(0.1
)
—
Digital asset impairments
0.1
—
Asset impairments
0.2
6.1
Stock-based compensation expense
7.9
9.8
Deferred income taxes
(2.6
)
(16.3
)
(Gain) loss on disposal of property and
equipment, net
(2.6
)
3.5
Other
(5.7
)
(2.1
)
Changes in operating assets and
liabilities:
Receivables, net
(30.1
)
(59.4
)
Merchandise inventories
474.6
215.6
Prepaid expenses and other assets
13.5
(1.4
)
Prepaid income taxes and income taxes
payable
171.5
(8.8
)
Accounts payable and accrued
liabilities
(354.9
)
(152.5
)
Operating lease right-of-use assets and
lease liabilities
2.8
17.2
Changes in other long-term liabilities
1.2
1.5
Net cash flows provided by (used in)
operating activities
338.2
(110.3
)
Cash flows from investing activities:
Capital expenditures
(11.6
)
(21.3
)
Purchases of marketable securities
(39.8
)
—
Proceeds from maturities of marketable
securities
27.5
—
Proceeds from sale of digital assets
4.5
—
Other
0.3
(2.3
)
Net cash flows used in investing
activities
(19.1
)
(23.6
)
Cash flows from financing activities:
Payments of financing costs
—
(3.0
)
Repayments of French term loans
(3.9
)
—
Settlement of stock-based awards
(0.7
)
(0.2
)
Net cash flows used in financing
activities
(4.6
)
(3.2
)
Exchange rate effect on cash, cash
equivalents and restricted cash
22.0
(11.1
)
Increase (decrease) in cash, cash
equivalents and restricted cash
336.5
(148.2
)
Cash, cash equivalents and restricted cash
at beginning of period
859.5
1,468.1
Cash, cash equivalents and restricted cash
at end of period
$
1,196.0
$
1,319.9
GameStop Corp.
Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
52 weeks ended January 28,
2023
52 weeks ended January 29,
2022
Cash flows from operating activities:
Net loss
$
(313.1
)
$
(381.3
)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization
61.7
77.2
Loss on retirement of debt
—
18.2
Asset impairments
2.7
6.7
Stock-based compensation expense
40.1
30.5
Gain on sale of digital assets
(7.2
)
—
Digital asset impairments
34.0
—
Deferred income taxes
(2.6
)
(16.3
)
Loss on disposal of property and
equipment, net
2.5
5.4
Other
1.2
(3.5
)
Changes in operating assets and
liabilities:
Receivables, net
(16.8
)
(38.4
)
Merchandise inventories
229.6
(329.6
)
Prepaid expenses and other assets
(25.2
)
(6.5
)
Prepaid income taxes and income taxes
payable
172.4
(21.7
)
Accounts payable and accrued
liabilities
(66.2
)
224.4
Operating lease right-of-use assets and
lease liabilities
(4.9
)
(0.9
)
Changes in other long-term liabilities
—
1.5
Net cash flows provided by (used in)
operating activities
108.2
(434.3
)
Cash flows from investing activities:
Capital expenditures
(55.9
)
(62.0
)
Purchases of marketable securities
(276.8
)
—
Proceeds from maturities of marketable
securities
27.5
—
Proceeds from sale of digital assets
81.9
—
Other
0.6
(2.8
)
Net cash flows used in investing
activities
(222.7
)
(64.8
)
Cash flows from financing activities:
Proceeds from issuance of common stock,
net of costs
—
1,672.8
Net repayments of senior notes
—
(307.4
)
Repayments of revolver borrowings
—
(25.0
)
Repayments of French term loans
(3.9
)
—
Settlement of stock-based awards
(4.0
)
(136.8
)
Payments of financing costs
—
(3.0
)
Net cash flows (used in) provided by
financing activities
(7.9
)
1,200.6
Exchange rate effect on cash, cash
equivalents and restricted cash
(1.5
)
(16.6
)
(Decrease) increase in cash, cash
equivalents and restricted cash
(123.9
)
684.9
Cash, cash equivalents and restricted cash
at beginning of period
1,319.9
635.0
Cash, cash equivalents and restricted cash
at end of period
$
1,196.0
$
1,319.9
GameStop Corp.
Schedule I
Sales Mix
(in millions)
(unaudited)
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
Net Sales:
Net Sales
Percent of
Total
Net Sales
Percent of
Total
Hardware and accessories(1)
$
1,242.8
55.8
%
$
1,188.7
52.7
%
Software(2)
670.4
30.1
%
785.9
34.9
%
Collectibles
313.2
14.1
%
279.3
12.4
%
Total
$
2,226.4
100.0
%
$
2,253.9
100.0
%
52 weeks ended January 28,
2023
52 weeks ended January 29,
2022
Net Sales:
Net Sales
Percent of
Total
Net Sales
Percent of
Total
Hardware and accessories(1)
$
3,140.0
53.0
%
$
3,171.7
52.8
%
Software(2)
1,822.6
30.7
%
2,014.8
33.5
%
Collectibles
964.6
16.3
%
824.2
13.7
%
Total
$
5,927.2
100.0
%
$
6,010.7
100.0
%
(1)
Includes sales of new and pre-owned
hardware, accessories, hardware bundles in which hardware and
digital or physical software are packaged together in a single SKU,
interactive game figures, strategy guides, mobile and consumer
electronics.
(2)
Includes sales of new and pre-owned video
game software, digital software and PC entertainment software.
GameStop Corp. Schedule II (in
millions) (unaudited)
Non-GAAP results
The following tables reconcile the Company's SG&A, operating
earnings, net income (loss) and earnings (loss) per share as
presented in its consolidated statements of operations and prepared
in accordance with United States generally accepted accounting
principles ("GAAP") to its adjusted SG&A, adjusted operating
income (loss), adjusted net income (loss) and adjusted earnings
(loss) per share. The diluted weighted-average shares outstanding
used to calculate adjusted earnings per share may differ from GAAP
weighted-average shares outstanding. Under GAAP, basic and diluted
weighted-average shares outstanding are the same in periods where
there is a net loss. The tax adjustments below for the 13 and 52
weeks ended January 28, 2023, respectively, include provisions for
the tax effects of non-GAAP adjustments. The reconciliations below
are from continuing operations only.
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
52 Weeks Ended January 28,
2023
52 Weeks Ended January 29,
2022
Adjusted
SG&A
SG&A
$
453.4
$
538.9
$
1,681.0
$
1,709.6
Transformation costs(1)(3)
(0.5
)
—
(0.9
)
(24.7
)
Significant transactions (2)
—
—
—
(0.4
)
Divestitures and other (3)
—
—
—
(0.1
)
Adjusted SG&A
$
452.9
$
538.9
$
1,680.1
$
1,684.4
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
52 Weeks Ended January 28,
2023
52 Weeks Ended January 29,
2022
Adjusted
Operating Income (Loss)
Operating earnings (loss)
$
46.2
$
(166.8
)
$
(311.6
)
$
(368.5
)
Transformation costs(1)(3)
0.5
—
0.9
24.7
Asset impairments
0.2
6.1
2.7
6.7
Significant transactions (2)
—
—
—
0.4
Divestitures and other (3)
—
—
—
0.1
Adjusted operating income (loss)
$
46.9
$
(160.7
)
$
(308.0
)
$
(336.6
)
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
52 Weeks Ended January 28,
2023
52 Weeks Ended January 29,
2022
Adjusted Net
Income (Loss)
Net income (loss)
$
48.2
$
(147.5
)
$
(313.1
)
$
(381.3
)
Transformation costs(1)(3)
0.5
—
0.9
24.7
Asset impairments
0.2
6.1
2.7
6.7
Significant transactions (2)
—
—
—
18.6
Divestitures and other (3)
—
—
—
0.1
Adjusted net income (loss)
$
48.9
$
(141.4
)
$
(309.5
)
$
(331.2
)
Adjusted Earnings (Loss) Per
Share
Basic
$
0.16
$
(0.47
)
$
(1.02
)
$
(1.14
)
Diluted
$
0.16
$
(0.47
)
$
(1.02
)
$
(1.14
)
Number of shares used in adjusted
calculation
Basic
304.3
303.6
304.2
290.4
Diluted
304.5
303.6
304.2
290.4
(1) Current year includes the impact of
cash severance costs partially offset by stock-based compensation
forfeitures related to workforce optimization efforts in connection
with our transformation initiatives. Prior year includes cash
severance and stock-based compensation costs for key personnel that
separated from the Company and expenses for consultants and
advisors related to the transformation initiatives.
(2) Prior year includes transaction costs
associated with our at-the-market ("ATM") offering. Adjusted net
loss in the prior year also includes the impact of the make-whole
premium and accelerated amortization associated with the voluntary
redemption of the 2023 Senior Notes recognized in interest (income)
expense and other, net in our Consolidated Statements of
Operations.
(3) Prior year amount related to cash
severance costs and stock-based compensation have been reclassified
to conform to the current year presentation.
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
52 Weeks Ended January 28,
2023
52 Weeks Ended January 29,
2022
Reconciliation of
Adjusted EBITDA to Net Income (Loss)
Net income (loss)
$
48.2
$
(147.5
)
$
(313.1
)
$
(381.3
)
Interest (income) expense and other,
net
(6.2
)
0.9
(9.5
)
26.9
Depreciation and amortization
14.2
24.0
61.7
77.2
Income tax expense (benefit)
4.2
(20.2
)
11.0
(14.1
)
EBITDA
$
60.4
$
(142.8
)
$
(249.9
)
$
(291.3
)
Stock-based compensation expense
21.4
9.8
53.6
22.5
Transformation costs(1)(3)
0.5
—
0.9
24.7
Asset impairments
0.2
6.1
2.7
6.7
Significant transactions(2)
—
—
—
0.4
Divestitures and other(3)
—
—
—
0.1
Adjusted EBITDA
$
82.5
$
(126.9
)
$
(192.7
)
$
(236.9
)
(1) Current year includes the impact of
cash severance costs partially offset by stock-based compensation
forfeitures related to workforce optimization efforts in connection
with our transformation initiatives. Prior year includes cash
severance and stock-based compensation costs for key personnel that
separated from the Company and expenses for consultants and
advisors related to the transformation initiatives.
(2) Prior year includes transaction costs
associated with the ATM offering.
(3) Prior year amounts related to cash
severance costs and stock-based compensation have been reclassified
to conform to the current year presentation.
GameStop Corp. Schedule III (in
millions) (unaudited)
Non-GAAP results
The following table reconciles the Company's cash flows provided
by operating activities as presented in its unaudited Consolidated
Statements of Cash Flows and prepared in accordance with GAAP to
its free cash flow.
13 Weeks Ended January 28,
2023
13 Weeks Ended January 29,
2022
52 Weeks Ended January 28,
2023
52 Weeks Ended January 29,
2022
Net cash flows provided by (used in)
operating activities
$
338.2
$
(110.3
)
$
108.2
$
(434.3
)
Capital expenditures
(11.6
)
(21.3
)
(55.9
)
(62.0
)
Free cash flow
$
326.6
$
(131.6
)
$
52.3
$
(496.3
)
Non-GAAP Measures and Other
Metrics
Adjusted EBITDA, adjusted SG&A expense, adjusted operating
income, adjusted net income and adjusted earnings (loss) per share
are supplemental financial measures of the Company’s performance
that are not required by, or presented in accordance with GAAP. We
believe that the presentation of these non-GAAP financial measures
provides useful information to investors in assessing our financial
condition and results of operations.
We define Adjusted EBITDA as net income (loss) before income
taxes, net interest (income) expense, depreciation and
amortization, stock-based compensation expense, transformation
costs, business divestitures, asset impairments, severance and
other non-cash charges. Net income (loss) is the GAAP financial
measure most directly comparable to Adjusted EBITDA. Our non-GAAP
financial measures should not be considered as an alternative to
the most directly comparable GAAP financial measure. Furthermore,
non-GAAP financial measures have limitations as an analytical tool
because they exclude some but not all items that affect the most
directly comparable GAAP financial measures. Some of these
limitations include:
- Certain items excluded from Adjusted EBITDA are significant
components in understanding and assessing a company’s financial
performance, such as a company’s cost of capital and tax
structure;
- Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for our working capital needs;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements; and
- Our computations of Adjusted EBITDA may not be comparable to
other similarly titled measures of other companies.
We compensate for the limitations of Adjusted EBITDA, adjusted
SG&A expense, adjusted operating income, adjusted net income
and adjusted earnings (loss) per share as analytical tools by
reviewing the comparable GAAP financial measure, understanding the
differences between the GAAP and non-GAAP financial measures and
incorporating these data points into our decision-making process.
Adjusted EBITDA, adjusted SG&A expense, adjusted operating
income, adjusted net income and adjusted earnings (loss) per share
is provided in addition to, and not as an alternative to, the
Company’s financial results prepared in accordance with GAAP, and
should not be considered in isolation or as a substitute for
analysis of our results as reported under GAAP. Because Adjusted
EBITDA, adjusted SG&A expense, adjusted operating income,
adjusted net income and adjusted earnings (loss) per share may be
defined and determined differently by other companies in our
industry, our definitions of these non-GAAP financial measures may
not be comparable to similarly titled measures of other companies,
thereby diminishing their utility.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230321005956/en/
GameStop Corp. Investor Relations (817) 424-2001
ir@gamestop.com
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