GRAPEVINE, Texas, Dec 10, 2019 (GLOBE NEWSWIRE via COMTEX) -- GameStop Corp. /zigman2/quotes/203755179/composite GME +3.75% , today reported sales, earnings and share repurchase activity for the third quarter ended November 2, 2019, and issued updated guidance for fiscal 2019.
George Sherman, GameStop's chief executive officer said, "Our third quarter results continue to reflect the prevailing industry trends, most notably the unprecedented decline in new hardware sales seen across the market as the current generation of gaming consoles reach the end of their lifecycle and consumers delay their spending in anticipation of new hardware releases. With console makers set to introduce new and innovative gaming consoles late next year, we anticipate this trend to continue until the fourth quarter of 2020. Despite the current top-line trends, we are pleased with the continued strong progress that we are making against our strategic initiatives as we transform GameStop for the future. We remain on track to achieve our $200 million annualized operating profit improvement goal, by 2021 and we believe our strategic initiatives will enable to us to achieve our long-term growth and profit objectives as we fully leverage our unique leadership position and brand in the video game space."
Mr. Sherman continued, "Since July, we have repurchased more than one-third of our outstanding shares, underscoring our continued conviction in the long-term value proposition of GameStop, our ability to execute on our strategic initiatives and deliver positive cash flows, as well as our commitment of returning capital to shareholders."
Third Quarter Results
GameStop's third quarter total global sales decreased 25.7% (24.7% in constant currency) to $1.4 billion, driven by a consolidated comparable store sales decrease of 23.2%.
-- New hardware sales decreased 45.8%, reflecting anticipated next generation console launches in 2020.
-- New software sales decreased 32.6%, with growth in Nintendo Switch software titles more than offset by weaker title launches across other consoles in the quarter compared to last year.
-- Accessories sales decreased 13.4%.
-- Pre-owned sales declined 13.3% with declines in hardware and software.
-- Collectibles sales increased 4.3%, with continued growth in both domestic and international stores.
GameStop's third quarter GAAP net loss was ($83.4) million, or ($1.02) per diluted share, compared to net loss of ($488.6) million, or ($4.78) per diluted share, in the prior-year quarter, which included the Spring Mobile business. Third quarter fiscal 2019 results include charges of $43.0 million, or $0.52 per diluted share, which included non-cash asset impairment charges, tax adjustments, transformation costs and other items. Third quarter fiscal 2018 results included non-operating, non-cash intangible asset impairment charges of $587.5 million, primarily related to goodwill.
Excluding the $43.0 million of impairment charges and other items, GameStop's adjusted net loss from continuing operations for the third quarter was ($40.2) million or ($0.49) per diluted share, compared to net income from continuing operations of $50.0 million, or $0.49 per diluted share, in the prior-year quarter.
A reconciliation of non-GAAP results, including adjusted net income (loss) from continuing operations and adjusted operating earnings from continuing operations, to its most directly comparable GAAP financial measure is included with this release (Schedule III).
Capital Allocation Update
During the quarter, the company repurchased 22.6 million shares of its common stock, for $115.7 million, or an average price of $5.11 per share, bringing the year-to-date repurchase activity to $178.6 million for 34.6 million shares, or 34% of the shares outstanding, at an average price of $5.14 per share. As of the end of the fiscal third quarter, the company had 67.8 million shares outstanding. The company remains committed to opportunistically returning excess capital to shareholders as it continues to execute on its strategic initiatives to position the Company for the long term.
As previously disclosed, during fiscal 2019, the company has reduced its outstanding debt by $401.7 million and has $419.4 million of long-term debt remaining on the balance sheet at quarter end.
The company is providing the following updated guidance for full fiscal year 2019:
Comparable Store Sales A decline in the high-teens Adjusted (Non-GAAP) Earnings Per Share (diluted)* $0.10 to $0.20 Capital Expenditures $80 million to $85 million
*A reconciliation of non-GAAP forward-looking projections to GAAP financial measures is not available as the nature or amount of potential adjustments, which may be significant, cannot be determined at this time.
Conference Call Information
A conference call with GameStop Corp.'s management is scheduled for December 10, 2019 at 5:00 p.m. ET to discuss the company's financial results. The phone number for the call is 866-575-6539 and the confirmation code is 5258686. This call, along with supplemental information, can also be accessed at GameStop Corp.'s investor relations home page at http://investor.GameStop.com/ . The conference call will be archived for two months on GameStop's corporate website.
GameStop Corp., a Fortune 500 company headquartered in Grapevine, Texas, is the world's largest video game retailer, operates over 5,600 stores across 14 countries, and offers the best selection of new and pre-owned video gaming consoles, accessories and video game titles, in both physical and digital formats. GameStop also offers fans a wide variety of POP! vinyl figures, collectibles, board games and more. Through GameStop's unique buy-sell-trade program, gamers can trade in video game consoles, games, and accessories, as well as consumer electronics for cash or in-store credit. The company's consumer product network also includes www.gamestop.com and Game Informer(R) magazine, the world's leading print and digital video game publication.
General information about GameStop Corp. can be obtained at the company's corporate website. Follow @GameStop and @GameStopCorp on Twitter and find GameStop on Facebook at www.facebook.com/GameStop .
Non-GAAP Financial Measures and Other Metrics