GameStop Corp. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

  • Total Sales: $942M, down 26.7% YoY vs. $1.29B in Q2 FY2019, but ahead of expectations.
  • Comparable Store Sales: Declined 12.7% YoY, beating internal forecasts.
  • Gross Margin: 26.8%, down 420 bps YoY due to higher hardware sales mix.
  • SG&A Expenses: $336.9M (adjusted), decreased $108M YoY. Over 2/3 are permanent reductions.
  • Net Loss: $111.3M ($1.71 per diluted share), improved from $415.3M loss ($4.15/share) YoY.
  • Adjusted Net Loss: $91.2M ($1.40 per diluted share) vs. $32M loss ($0.32/share) in Q2 FY2019.
  • Free Cash Flow: +$182M, strong positive result amid pandemic environment.
  • Cash Balance: $735M vs. expectations of $575M–$625M. Reduced revolver borrowings by $100M.
  • Inventory: $474.6M, reduced by 50% YoY.
  • Store Count: 5,122, down 602 YoY. Closed 206 in Q2, 388 YTD. On track to close 400–450 for FY2020.

Strategic Initiatives & Operational Highlights

  • Digital Transformation: E-commerce sales up 800% YoY; now 20% of revenue vs. low single digits previously.
  • Fulfillment: 90% of buy online, pick-up in-store orders fulfilled in 24 hours; 70% same day.

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Operator: Greetings, and welcome to GameStop's Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Eric Cerny, Investor Relations. Thank you. You may begin. Eric Cerny: Thank you, and welcome to GameStop's Second Quarter Fiscal 2020 Earnings Conference Call. This call will include forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Any such statement should be considered in conjunction with the cautionary statements in the safe harbor statement in the earnings release and risk factors discussed in reports filed with the SEC. GameStop assumes no obligation to update any of these forward-looking statements or information. A reconciliation and other information regarding non-GAAP financial measures discussed on this call can be found in the earnings release issued earlier today as well as the Investors section of our website. With me today are GameStop's Chief Executive Officer, George Sherman; and Chief Financial Officer, Jim Bell. On today's call, George will share insights into our second quarter performance and updates regarding GameStop's strategic framework for the future. Jim will then provide more detail on our financial results and expectations for fiscal 2020. And then we'll open the call to take your questions. Now I would like to turn the ca

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