GameStop (GME) Misses Q4 EPS by 1c, Revenues Miss; Comps Rise 6.5%

March 23, 2021 4:27 PM EDT
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Price: $158.36 -6.99%

EPS Growth %: +5.5%

Financial Fact:
Interest income: 0

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JFIN, JKS, More
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GameStop (NYSE: GME) reported Q4 EPS of $1.34, $0.01 worse than the analyst estimate of $1.35. Revenue for the quarter came in at $2.11 billion versus the consensus estimate of $2.21 billion.

  • Comparable store sales increased 6.5%;
  • Net sales were $2.122 billion compared to $2.194 billion in the fiscal 2019 fourth quarter, reflecting an operating environment that included a 12% decrease in the store base due to the Company’s strategic de-densification efforts and a reduction of approximately 27% in European store operating days during the quarter as a result of temporary store closures in response to the COVID-19 pandemic;
  • Global E-Commerce sales (included in comparable store sales) increased 175% and represented 34% of net sales in the fiscal 2020 fourth quarter versus 12% of net sales in the fiscal 2019 fourth quarter;
  • Gross margin was 21.1%, a decline of 610 basis points compared to the fiscal 2019 fourth quarter, reflecting an expected mix shift toward lower margin console sales in response to the launch of generation 9 consoles, increased freight and credit card fees associated with the shift to E-Commerce sales, and a broader promotional stance;
  • Selling, general and administrative expenses were $419.1 million, a decline of $92.6 million, or 18%, from $511.7 million in the fiscal 2019 fourth quarter, driven by the Company’s cost optimization initiatives;
  • Income tax expense was a benefit of $69.7 million due to a change in the tax status of certain foreign entities, and the impact of the CARES Act, including tax benefits associated with the availability of a five-year carryback period for certain current year tax losses (which compares to income tax expense of $43.8 million in the fiscal 2019 fourth quarter), and;
  • Net income was $80.5 million, or $1.19 per diluted share on 67.8 million shares outstanding and included a $1.03 per share tax benefit as described above, as compared to diluted earnings per share of $0.32 in the fiscal 2019 fourth quarter. Adjusted net income was $90.7 million or $1.34 per diluted share, compared to adjusted net income of $83.8 million or $1.27 per diluted share in the prior year fourth quarter.

George Sherman, GameStop’s chief executive officer, said, “I am proud of how our entire organization came together in 2020 to adapt to the challenging pandemic environment, effectively serve our customers’ demand for gaming and entertainment products, and navigate through the year with strong liquidity and a strengthened balance sheet. Our execution led to a profitable fourth quarter that included a 6.5% comparable store sales growth, a 175% increase in global E-Commerce sales and a $92.6 million reduction in SG&A. The past year also saw us take steps to accelerate our de-densification efforts and streamline our store footprint, leverage our retail locations to provide same-day delivery and curbside pickups, and continue to enhance our suite of E-Commerce platforms. We also added important experience to our board by appointing several new directors with backgrounds in corporate finance, E-Commerce and technology and subsequently established a strategy-focused committee to accelerate our transformation.”

“We are off to a strong start in 2021 as February comparable store sales increased 23%, led by continued strength in global hardware sales. As we look ahead, we are excited by the opportunities that are in front of us as we begin prioritizing long-term digital and E-Commerce initiatives while continuing to execute on our core business during this emerging console cycle. Our emphasis in 2021 will be on improving our E-Commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue,” Sherman concluded.

GUIDANCE:

As a result of prolonged pandemic related store closures which began in March 2020, which will impact the calculation of comparable store sales this year, the Company does not currently intend to report this metric in fiscal 2021.

For earnings history and earnings-related data on GameStop (GME) click here.



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