Please read the following discussion and analysis of our financial condition and
results of operations together with our consolidated financial statements and
related notes included under Part I, Item 1 of this Quarterly Report on Form
10-Q.
The following discussion contains 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"). In some cases,
forward-looking statements can be identified by the use of terms such as
"anticipates," "believes," "continues," "could," "estimates," "expects,"
"intends," "may," "plans," "potential," "predicts," "pro forma," "seeks,"
"should," "will" or similar expressions. Forward-looking statements include our
current assumptions, expectations or forecasts of future events.
Forward-looking statements are based on current expectations and assumptions and
involve known and unknown risks, uncertainties and other factors that may cause
our or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. You should not place undue reliance on these
forward-looking statements. The forward-looking statements involve a number of
risks and uncertainties. Although we believe that the expectations reflected in
our forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements. 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.
All forward-looking statements included or incorporated by reference in this
Quarterly Report on Form 10-Q are based upon information available to us as of
the date of this Quarterly Report on Form 10-Q, and we undertake no obligation
to update or revise any of these forward-looking statements for any reason,
whether as a result of new information, future events or otherwise after the
date of this Quarterly Report on Form 10-Q, except as required by law.
OVERVIEW
GameStop Corp. ("GameStop," "we," "us," "our," or the "Company") offers games,
entertainment products and technology through its e-commerce properties and
stores.
We operate our business in four geographic segments: United States, Canada,
Australia and Europe. Our fiscal year is composed of the 52 or 53 weeks ending
on the Saturday closest to the last day of January. The fiscal year ending
January 29, 2022 and the fiscal year ended January 30, 2021 each consist of 52
weeks. All three and nine month periods presented herein contain 13 weeks and 39
weeks, respectively. All references to years, quarters and months relate to
fiscal periods rather than calendar periods. The discussion and analysis of our
results of operations refers to continuing operations unless otherwise noted.
Our business, like that of many retailers, is seasonal, with the major portion
of the net sales realized during the fourth quarter, which includes the holiday
selling season.
Impact from COVID-19
Throughout 2020, we temporarily closed stores or limited store operations at
various times across our four operating segments. During the first quarter of
2021, temporary store closures were limited to certain jurisdictions in Europe
and Canada. During the second quarter of 2021, most of our stores in all
jurisdictions returned to normal operations. However, with the resurgence of
COVID-19 cases due to variants, we experienced some temporary closures in our
Australian segment that persisted through the third quarter of 2021. As certain
of our stores experienced temporary closures during the nine months ended
October 30, 2021, some of our stores offered and continue to offer curbside
pick-up. We remain vigilant in our compliance with COVID-19 regulations across
our operating regions.
While the gaming industry has not been as severely impacted by the COVID-19
pandemic as certain other consumer businesses, we have experienced adverse
impacts on our results of operations during the nine months ended October 30,
2021. Factors impacted by the COVID-19 pandemic include, but are not limited to,
the following, many of which are beyond our control:
•the geographies impacted by the virus;
•changes in the economy, consumer confidence and consumer spending habits,
including spending for the merchandise that we sell;
•disruption to our supply chain including the manufacturing, supply,
distribution, transportation and delivery of our products; and
•delays in the release of key video game titles.
The COVID-19 pandemic remains an evolving situation and its future impact on all
areas of our business remain unknown. The COVID-19 pandemic and the related
responses of governments, customers, suppliers and other third parties may
materially adversely impact our business, financial condition, results of
operations and cash flows. See Item 1A of Part II, "Risk Factors" for additional
information.
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BUSINESS PRIORITIES
GameStop has two long-term goals: delighting customers and delivering value for
stockholders. We are evolving from a video game retailer to a technology company
that connects customers with games, entertainment and a wide assortment of
products. We are focused on offering vast product selection, competitive pricing
and fast shipping - supported by high-touch customer service and a frictionless
e-commerce and in-store experience. Accordingly, we prioritize long-term revenue
growth and market leadership over short-term margins.
We are taking steps that include:
•Increasing the size of our addressable market by growing our product catalog
across consumer electronics, PC gaming, collectibles, toys and other categories
that represent natural extensions of our business;
•Expanding fulfillment operations to improve speed of delivery and service to
our customers;
•Building a superior customer experience, including by establishing a U.S.-based
customer care operation, and;
•Strengthening technology capabilities, including by investing in new systems,
modernized e-commerce assets and an expanded, experienced talent base.
The Company will continue to invest in growth initiatives, while continuing to
prioritize maintaining a strong balance sheet.
Connected to our transformation efforts, we have incurred and may continue to
incur increased labor costs, severance expenses, marketing costs, customer care
costs, and consulting fees with third parties. See "Consolidated Results from
Operations-Selling, General and Administrative Expenses" for further
information.
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