The following discussion should be read in conjunction with the information
contained in our unaudited condensed consolidated financial statements,
including the notes thereto. Statements regarding future economic performance,
management's plans and objectives, and any statements concerning assumptions
related to the foregoing contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations, constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Such statements are based upon management's current beliefs, views,
estimates and expectations. These forward-looking statements are based upon the
current beliefs, views, estimates and expectations of our management including
as to the Company's industry, business strategy, goals and expectations
concerning its market position, future operations, margins, profitability,
capital expenditures, liquidity and capital resources and other financial and
operating information. Such statements include without limitation those about
the Company's expectations for fiscal 2019, future financial and operating
results, projections, expectations and other statements that are not historical
facts. All statements regarding targeted and expected benefits of our
transformation, capital allocation, profit improvement and cost-savings
initiatives, and expected fiscal 2019 results, are forward-looking statements
and are inherently subject to significant business, economic and competitive
risks, uncertainties and contingencies, many of which are difficult to predict
and beyond our control. In addition, these forward-looking statements are
subject to assumptions with respect to future business strategies and decisions
that are subject to change. Actual results may differ materially from the
anticipated results discussed in these forward-looking statements. A number of
factors could cause our actual results, performance, achievements or industry
results to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. Such
factors include, without limitation, the uncertain impact, effects and results
of pursuit of operating, strategic, financial and structural alternatives,
including the Reboot strategic plan; volatility in capital and credit markets,
including changes that reduce availability, and increase costs, of capital and
credit; our inability to obtain sufficient quantities of product to meet
consumer demand; the timing of release and consumer demand for new and pre-owned
products; our ability to continue to expand, and successfully open and operate
new stores for our collectibles business; risks associated with achievement of
anticipated financial and operating results from acquisitions; our ability to
sustain and grow our console digital video game sales; the impact intangible
asset impairments; cost reduction initiatives, including store closing costs;
risks related to changes in, and our continued retention of, executives and
other key personnel; changes in consumer preferences and economic conditions;
increased operating costs, including wages; cyber security events and related
costs; risks associated with international operations; and increased
competition. Please refer to the "Disclosure Regarding Forward-looking
Statements" and "Risk Factors" sections in our Annual Report on Form 10-K for
the fiscal year ended February 2, 2019 filed with the SEC on April 2, 2019 (the
"2018 Annual Report on Form 10-K").
We caution you not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. All subsequent written and oral
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained
or referred to in this section and in our 2018 Annual Report on Form 10-K and
other filings with the SEC. Except to the extent required by applicable law or
regulation, we undertake no obligation to update these forward-looking
statements to reflect events or circumstances after the date of this filing or
to reflect the occurrence of unanticipated events.
OVERVIEW
GameStop Corp. ("GameStop," "we," "us," "our," or the "Company") is a global,
multichannel video game, consumer electronics and collectibles retailer. We
operate over 5,600 stores across 14 countries. Our consumer product network also
includes www.gamestop.com and Game Informer® magazine, the world's leading print
and digital video game publication.
We operate our business in four geographic segments: United States, Canada,
Australia and Europe. Our former Technology Brands segment had been primarily
comprised of Spring Mobile and Simply Mac. Spring Mobile was sold in January
2019 and Simply Mac was sold in September 2019. In this Quarterly Report, for
all periods presented, Simply Mac is reported in the United States segment, and
the historical results of Spring Mobile are reported as discontinued operations.
The discussion and analysis of our results of operations refers to continuing
operations unless otherwise noted.
Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest
to the last day of January. The fiscal years ending February 1, 2020 ("fiscal
2019") and February 2, 2019 ("fiscal 2018") each consist of 52 weeks. Our
business, like that of many retailers, is seasonal, with the major portion of
the net sales realized during the fourth fiscal quarter, which includes the
holiday selling season.

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Growth in the video game industry is generally driven by the introduction of new
technology. Gaming consoles have historically launched in five to seven-year
cycles as technological developments provide significant improvements in the
gaming experience and add other entertainment capabilities. Consumer demand for
gaming consoles are typically the highest in the early years of the cycle and
the weakest in the latter years. The current generation of consoles include the
Sony PlayStation 4 (launched in 2013), Microsoft Xbox One (launched in 2013) and
the Nintendo Switch (launched in 2017). We believe the current generation
consoles from Sony and Microsoft are nearing the end of their cycle and we
anticipate that the next generation consoles from these manufacturers will
launch in the second half of 2020.
The sale of video games delivered through digital channels and other forms of
gaming continue to grow and take an increasing percentage of physical video game
sales. We currently sell various types of products that relate to the digital
category, including digitally downloadable content ("DLC"), full game downloads,
Xbox LIVE, PlayStation Plus and Nintendo network points cards, as well as
prepaid digital and prepaid subscription cards. We have made significant
investments in e-commerce and in-store and website functionality to enable our
customers to access digital content easily and facilitate the digital sales and
delivery process. We plan to continue to invest in these types of processes and
channels to grow our digital sales base and enhance our market leadership
position in the video game industry and in the digital aggregation and
distribution category.
In our discussion of the results of operations, we refer to comparable store
sales, which is a measure commonly used in the retail industry and indicates
store performance by measuring the growth or decline in sales for certain stores
for a particular period over the corresponding period in the prior year. Our
comparable store sales are comprised of sales from our video game brands stores,
including stand-alone collectible stores, operating for at least 12 full months
as well as sales related to our websites and sales we earn from sales of
pre-owned merchandise to wholesalers or dealers. Comparable store sales for our
international operating segments exclude the effect of changes in foreign
currency exchange rates. The calculation of comparable store sales for the 13
and 39 weeks ended November 2, 2019 compares those periods to the most closely
comparable weeks for the prior year period. The method of calculating comparable
store sales varies across the retail industry. As a result, our method of
calculating comparable store sales may not be the same as other retailers'
methods. We believe our calculation of comparable store sales best represents
our strategy as an omnichannel retailer that provides its consumers several ways
to access its products.
BUSINESS STRATEGY
In May of 2019, we announced our multi-year transformation initiative, which we
refer to as GameStop Reboot to position GameStop on the correct strategic path
and fully leverage our unique position and brand in the video game industry. Our
strategic plan is anchored on the following four tenets.
Optimize the core. Improve the efficiency and effectiveness of operations across
the organization, including cost restructuring, inventory management
optimization, adding and growing high margin product categories, and
rationalizing the global store base.
Become the social / cultural hub for gaming. Create the social and cultural hub
of gaming across the GameStop platform.
Build digital platform. Develop a Frictionless Digital Ecosystem. Develop and
deploy a frictionless consumer facing digital environment, including the recent
relaunch of GameStop.com, to reach customers more broadly across the
omni-channel platform and give them the full spectrum of content and access to
products they desire.
Transform vendor partnerships. Transform our vendor and partner relationships to
unlock additional high-margin revenue streams and optimize the lifetime value of
every customer.
Connected to our transformation efforts, we have incurred and expect to incur
future costs including, but not limited to, consulting fees, severance and store
closure costs. See "Consolidated Results from Operations-Selling, General and
Administrative Expenses" for further information.
We remain committed to a balanced and disciplined capital allocation approach,
which will return capital to shareholders when the time is right and balancing
that opportunity against the need to maintain a strong balance sheet and to
invest in responsible growth that will drive innovation for the business. As of
November 2, 2019, we have repurchased $178.6 million, or 34.6 million shares,
under our authorized repurchase program. See Note 1, "General Information," for
further information.


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