GameStop Form 10-Q: Q3 Fiscal Year 2018

Key insights

6 takeaways

01
Goodwill impairment charges of $557.3 million were recognized in the 13-week period; the company reported an operating loss of $493.5 million, compared with operating earnings of $87.6 million a year earlier.See it on page 1
02
Net sales for the 13 weeks ended November 3, 2018 increased 4.8% to $2,084.4 million, while 39-week net sales decreased 1.0% to $5,665.1 million.See it on page 1
03
The company agreed on November 21, 2018 to sell its Spring Mobile business for a cash purchase price of $700 million, expected to close in the fourth quarter of fiscal 2018.See it on page 1
04
Pre-owned and value video game product sales fell 13.4% in the 13-week period, which the company attributes mainly to a decline in pre-owned software sales.See it on page 1
05
The company's Board is reviewing strategic and financial alternatives, including a potential sale of the company, and states there can be no assurance the review will result in any specific transaction.See it on page 1
06
The 39-week net loss was $485.3 million, compared with net income of $140.6 million in the prior-year period.See it on page 1

Summary

GameStop Corp.'s Form 10-Q for the quarterly period ended November 3, 2018 (fiscal 2018 third quarter) reports unaudited condensed consolidated financial statements covering the 13 and 39 weeks ended that date, compared with the prior-year periods ended October 28, 2017. The company describes itself as a global family of specialty retail brands with five reportable segments: four Video Game Brands segments (United States, Canada, Australia, Europe) and a Technology Brands segment. It operated 7,173 company-operated stores as of November 3, 2018.

For the 13 weeks, net sales rose 4.8% to $2,084.4 million, and the company recorded an operating loss of $493.5 million and a net loss of $488.6 million; the period included $557.3 million in goodwill impairments and $30.2 million in asset impairments. For the 39 weeks, net sales fell 1.0% to $5,665.1 million and the net loss was $485.3 million, compared with net income of $140.6 million a year earlier.

The company also disclosed a November 21, 2018 agreement to sell its Spring Mobile business for $700 million, expected to close in the fourth quarter of fiscal 2018, and a board review of strategic and financial alternatives that includes a potential sale of the company. Cash and cash equivalents were $454.5 million at period end.