GameStop (GME) Tops Q1 EPS by 10c, Revs Miss; Eliminates Dividend
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GameStop (NYSE: GME) reported Q1 EPS of $0.07, $0.10 better than the analyst estimate of ($0.03). Revenue for the quarter came in at $1.55 billion versus the consensus estimate of $1.64 billion.
Consolidated comparable store sales decrease of 10.3% (10.2% in the U.S. and 10.4% internationally).
George Sherman, GameStop’s chief executive officer said, “Since joining GameStop in April, I have been undertaking a thorough review of the business and working closely with the team to improve our operational and financial performance, address the challenges that have impacted our results, and execute both deliberately and with urgency. We believe we will transform the business and shape the strategy for the GameStop of the future. This will be driven by our go-forward leadership team that is now in place, a multi-year transformation effort underway, a commitment to focusing on the core elements of our business that are meaningful to our future, and a disciplined approach to capital allocation.”
On June 3, 2019, GameStop’s board of directors elected to eliminate the company’s quarterly dividend, effective immediately, in an effort to strengthen the company’s balance sheet and provide increased financial flexibility and optionality. Eliminating the company’s quarterly common stock dividend will preserve approximately $157 million in cash annually, based on the amount of dividends paid in 2018, and enable the company to further reduce its outstanding debt and provide flexibility to drive value creation for shareholders. As of June 3, 2019, the company has reduced the total amount outstanding on its 2021 unsecured notes by approximately $39 million, leaving $436 million outstanding.
As previously announced on April 2, 2019, GameStop is currently implementing a cost-savings and operating profit improvement initiative designed to strengthen the organization for the future and support long-term improved financial performance and profitability. These initiatives, which include supply chain efficiencies, operational improvements, expense savings and pricing and promotion optimization, commenced during the first fiscal quarter of 2019. The company remains on track to achieve annualized operating profit improvements of approximately $100 million.
FY 2019 Total Sales (calculated using sales from continuing operations) -5% to -10%
FY 2019 Comparable Store Sales -5% to -10%
For earnings history and earnings-related data on GameStop (GME) click here.
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