GameStop (GME) 9 Sep 202020 Q2 Earnings call transcript

Greetings, and welcome to the GameStop Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host, Eric Cerny, Investor Relations. you. Thank

begin. may You

cause welcome in This second well updates on statements, call be various statement Sherman; that of subject any our detail George and strategic from call can with on differ earnings Any earnings risk expectations. factors update which discussed fiscal conference to such conjunction could uncertainties and with will call. section Bell. will the be discussed risks more these results the and for into results today to the earnings our found website. insights our obligation provide measures your framework and call, fiscal statements share performance you, With release of financial GameStop to quarter materially Safe considered second GameStop’s take Financial Harbor should XXXX are GameStop’s, no Chief actual Thank this On reports George we’ll and questions. the regarding today, include or Jim Officer, then call release as open today’s Chief Executive reconciliation filed the statements Then, the for cautionary statement SEC. assumes expectations GameStop’s in regarding information. the me other Investors and forward-looking in non-GAAP to the financial Jim future. A will forward-looking as Officer, XXXX. are and and to in issued quarter earlier information

to Sherman. Executive George like would the call to company’s I turn Chief over Now, the Officer,

quarter us earnings safe joining you of and second well. afternoon, call. our you Eric. everyone each Good Thanks, thank on are for and I hope today

our These bridge evidenced robust service and dedication during to progress team and testament mission, customers of results GameStop's generation. priorities, and strategic to growth, period expense strong ability wish introduction time. the to continue flow free to proud by quarter show serving unprecedented be our meaningful their I through the COVID-XX, our second and shop and reduction navigate importantly until Our safely this results consoles. to our cash our digital significant whenever our they of new however strategy as

Turning to the highlights for quarter. second some

of XX.X%, store consumer gaming comparable our sales e-commerce was declined the driven ahead continued which success expectations and demand by and our channel. for Our of

also versus total they year, While exceeded year. sales XX% and Results XX% days of as our to last expectations year-over-year, in resulted own worldwide. operating even declined related start second expectations XX.X%, at quarter of stores were the fewer initial ahead store store the we quarter our have closures COVID-XX in temporary the fewer

decline chose with our decline we've new us shelter we to on negatively emerging us. capabilities engaged member our software with to sales few year. to Our supply early product year long May of quarterly on with modest place better digital we significant omnichannel and whenever our customers these launches end our and before, kept particularly July, the than exceptional the Despite and was sales chain months us and shop expanding in omnichannel expected global quarter loyalty connect hardware limited as a in base, however, June last in to the pandemic began to In responded last with meet pandemic investment sales results the and coupled allowed constrained a suppliers. needs and by for bit our capabilities their supply of were new continue new and age to with a service wherever, ability from discussed strong they both cycle the We the surge generation as a by availability created the both to developed seven and accessories limitation headwinds, impacts impacted cycle. sales mandates, over as hardware the our we hardware the deliver demand, as ability availability in the

our to includes corresponding region. completion down real base make in a continue year-over-year, store progress We on our wind worldwide the de-densification strategy, of estate the market which underperforming decline XX% and Nordics with

in Importantly, of under in online, where represents of neighboring breakeven opportunity, the sales States, profit United store closed the transfer we've sales locations of market and seen greatest to just de-densification levels. well XX% volume excess

trade high area will transfer continue to optimize market sales capabilities and expanded allow omnichannel profitability. rate Our us accretively and

a Our major accelerating digital to a e-commerce years. create development by for been our frictionless strategic GameStop, growth ecosystem has objective several

dramatic quickly a shift recognized are towards that As an we that we historic the and represented shutdowns e-commerce seeing this pandemic began, opportunity.

I'm it, saw happy this that web and options in delivery for future. we to and additional As a doors effort frictionless a strategic Global us schedule and focus believe as we as and sales delivery, curbside an We XX%. upon our penetration well sales moment rose for report digital low-single our XXX% be store to pick and The prior the of to e-commerce leverage at ecosystem, ship should I to online grew that build and customers, result, in-store a I from shift enhanced the in billion cross and quarter, our beyond, business. quarter will for or to in our service capabilities. $X to momentum. a resources and the capabilities critical towards fulfillment enhanced at the diverted in imperative business and XXXX over from in deliver XXXX, e-commerce highly build digits call we build ahead see buy that least mentioned call long-term trajectory we're milestone only on as and thought advantageous such is e-commerce a our store

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and will of six the notably are second pleased efforts these task part our achieved other endeavors, fiscal have many strategy, overall a SG&A XX significant We of leveraged go increase expense in by in optimize further SG&A months of the team's I'm driven most very were our ongoing first that also environment million this no to of reported results basis strong reduction quarter, sales million rate on saw areas yield and the $XXX points quarter, $XXX decline, as results reported into reduction our were but progress expense operations. and the our These efficiency our for by in small and in detail Jim work initiatives here. the decline we in core despite XXXX. our

merchandising the side chain the launch of extending assortment business, It our will initial we On in of be assortment PC later that are wide pleased expanded with quarter. accessories. third and an the

market assortment and in high through early, higher products structure. high margins. we cost private the While PC with merchandise we accessory rates of strong this can GameStop our and deliver participate Likewise, absolutely sell pleased margin are quality lower believe for our meaningfully label with is that

by payable. to in improvements capital continue meaningful in accounts working realize reduction XX% inventory, in led a efficiency We XX% decline a and

These operating we've material to led the we approximately combined further early million negative June. the efforts liquidity $XXX closures reflected made with the fuel with of May cash $XXX the $XXX efforts million adjusted amid and a quarter our and flow within continued environment. most period challenging operational I'm pleased Overall, COVID-XX, by period, our million, in second free EBITDA quarter. even balance, progress strength, and of on store credit facility Our even for for end in reduced as cash including navigating borrowings

the yet newness, that was expected GameStop. are showed when second we As we of appropriately opportunity response quarter, the our to half consoles begin of the year, and ahead In cautious, generation customers the excited chose launch capitalize the newness are to next on holiday. of tremendous about to second available, there customers

new with we of hardware II. as Specifically, and Animal months, recent the Last share titles Nintendo that leading realize Crossing Switch physical Us results few market in for key launched the to continue such software

technology when available. and Additionally, strong controllers, we the seen is to have latest customer response headsets supply and

year with GameStop newness believe confidence show been several the and in are and bode in the customers well we as remains while And downloaded other our medium-term. the Our preferred hardware in new will second there in and that is well in success has demand, quarter from launched destination. GameStop there for later GameStop in us The benefit that digitally us, the favor near acceleration into gives games, XXXX. a software growth areas

disk consoles have a drive. new First,

will So for and years, we consoles software the that the next play seven both sell. digital the physical

learn regions the advantage most and taxation U.S. Importantly, there significant in from of forced With to increases across natural tradeoffs broadband work from are on and increased physical for activities, usage, the an make a broadband. remains many gaming. home on home world,

agreements efforts represent of sales partners. are our We to expand and redouble that are on have we’ll stay portion sharing for have the is game a and digital with revenue already the gaming sales, not gaming which here of subscription however, debating will Likewise, life digital the meaningful we recent growth through to select we foreseeable offers, our digital saying of we including physical future. simply continue

who to educate provide Second, we new providing technological leverage, array products, wide more new significant particularly loyalty base we us that upgrades intend immersive strong to a experiences. gaming on a asset of a huge of console have a even with customers them look to

they aspects physical the like trading. a and collect consumers as of games, value them Third, they

broadband without evolve download. continues up in environment we know software clear, immediate With day we capabilities better Almost available cycle than many summary, those volume. fulfilled it graphics, we same hour believe back does dramatically as copy store it orders months on this sales our excitement be of builds. storage were current our opportunity have as last space been physical the represents most over uncertain, the with or added within console the an console game take disk valuable on to a To XX% short-term same win get takes In delivery, the to buy day, consumers two. most to the four pickup internet. the and So and remains even cycle believe to online faster not can upcoming

by value in attain also continue position to our in will in us strong very while however, with managing This, to console stakeholders. loyalty expenses four unique long-term tightly We a profitable advancing our focus and strengths, our cycle the including base. gaming participate initiatives, significant drive will conservatively our inventory, we for strategic our growth plan leadership leveraging our combined and positions and on way,

Now, over the in to more let financials discuss detail. Jim to me our turn call

this the everyone. you insight, I'd take time second to year. results, walk now Thank you, through we're our I share the XXXX Good afternoon, will remainder quarter George. to fiscal and of some then approaching like

with our during team's to the As environment pleased challenging to George operating the we're second discussed, adapt very quarter. ability just

improved free as liquidity positive creating in optimize sheet, to flow later this ecosystem, overall investment our across balance our year. and leverage continue exit frictionless an drive us the to model cash omnichannel and quarter console generate healthier business launches a significant to digital operations, with the business pivot, approach enabled and the a we materially swiftly stronger to ability core Our efficiencies

XX% continuing end to Three, the XX.X% declined with our the set Turning the from impact strategy. of fiscal driven few year a Two, better year, seven was as stores months of year, internal in percentage to response the of, later quarter at XX.X%, Despite versus a And operating approximately the global second review reported de-densification to total sales in year COVID-XX beginning closures days of to delays of to the in reduction expectations second titles days part period. sales declined points the a from quarter, finally reduced operating headwinds, this of temporary prior global titles sales several pandemic. The one, due global store fewer reflects to of by decline, the $X.XX million the $XXX for the which these to than consolidated billion COVID-XX. the our pandemic, COVID-XX store X the new the comparable shift XX% last last gaming of year. console impact after adjusting due cycle. software in we slightly

approximately sales certain ongoing to of X are either unprofitable exit points or result geographies a a representing reminder, percentage decline of store our our closures overall businesses. de-densify As our permanent efforts

As to that pleased to efforts, part accretive wind report sales Relatedly, locations, as through the profitability, of the completed almost end we strong the to sales we we're which those neighboring of realize ongoing down or our of XX% region Nordics recaptured business. continue online is to July. transfer averaging transfer, of

cycle, these category of game pandemic than for performance, reflecting categories, the the generation end declined surge in recent the demand and In the we with terms quarter expected while COVID-XX video console product accessories hardware in of era. sales better see during the did XX% second

quarter sales supply the are we're some along of some COVID-XX-related given in the of reflected operating George the As the marketplace, later chain. end declines the lack cycle hardware in supply a largely of console of the mentioned, at effects with within console

Switch However, importantly, leveraged line. product on leading to perform the we world very position continues share well, our Nintendo around the and this market

down to lower continued performance despite for strong titles, and hardware inventory, and such supplement Last our new key of Crossing in and have II. of Overall, Us was hardware XX% we particularly accessories drive the sales. quarter, Additionally, availability leverage pre-owned to and software Animal as the the

when whether well. perform mentioned, very there or George As in is games, consoles, video titles we newness

the of However, somewhat of title from the negatively were first-half our impacted, year numerous pushed part the year. launches was performance the into as latter

example, third XX, additions as the store heavily were from push an second margins and newness in in-store the to As last quarter represented mix this various year NFL From from product XX% higher Hardware about year. Collectibles as title out sales to benefited the launch basket XX% hardware. of benefit tend the launched traffic, shifting year. down due delays. declined to last a XX% for the continues a quarter quarter gross for sales Madden to that compared franchise into margin product standpoint, of opportunity

points were our As margins XX.X%, quarter year. a the from result, global fiscal the software down basis more last XXX overall XX% led in gross second

XX%, costs of expenses related our March not or protective and approximately last for in the products and in of and ensure second safety adjusted quarter investment SG&A year. in expenses management and $XXX.X decline expenses, million notes, divestiture in SG&A adjusting severance and adjust approximately a do equipment $XX.X the were our compared reflecting additional associates to our the our million, the after $XXX of Now These XXXX turning $X.X to customers. the to expense quarter million million to results for and roughly objectives, exchange sanitary-related

also will of sales centers. in opportunities will an pandemic the operating back has a large the stores continued associates future of lower retailers. shown In that more come distribution resiliency some effective our quarters, the while volume maintain degree our throughout of efficiency and be omnichannel increases as and light, with we Importantly, to SG&A

portion compared loss directly the $XX.X meaningful was and the to other the second the are quarter. operating of operating quarter, loss reflecting period. $XXX.X charges are related prior year realized and of excluding an $XX.X our an in million Importantly, $XX.X prior cost expense an in operating second million loss compared aggressively rationalize severance second a to million to the year reductions seasonally of overall efforts slower We transformation, business. Adjusted permanent, structure quarter ongoing our to of million operating loss of

tax tax which the the XX.X%, transactions by negative jurisdictions across earnings leaseback quarter as certain reported of the and second was we effective items, operate. discrete sale for in Our rate impacted related primarily a mix the was to and

Excluding transformation, of share share, diluted quarter. charges from those $X.XX for share. onetime loss a $X.XX On excluding tax net per of to year other $X.XX of diluted and items, adjusted our rate adjusted was share, loss operations, loss second compared $X.XX or or a to was an compared million effective prior in per our was or million a the reported X.X%. Adjusted per severance of or loss $XX basis, quarter net the diluted million loss loss diluted continuing of $XXX.X loss $XXX.X million per net $XX.X a net

the continue on markets. During we strategically focus optimizing second our global store and certain de-densifying quarter, fleet to

stores, net quarter, of XXX year. we X,XXX the including At For of operated stores down. end bringing total is fewer our the a to compared wind worldwide year-to-date, we the worldwide XXX Nordics XXX worldwide, quarter, stores closed total last to which our

with to service of year. customers. to profit experience approximately Given worldwide profitably XXX to strong this our efficiently omnichannel we our stores online a more capabilities business will sales total us to XXX expanded and we're on the rates the transfer and close growth These continue track closures allow in along fiscal and

million, inventory focus continues Now At second million second $XXX.X well million ahead in we turning a to debt. ended We of and we to end net the the the of for sheet, be $XXX.X highlight $XXX the of total million of second compared zero to the quarter, fiscal total ended year quarter. which $XXXmillion, period reduction between cash area as and an prior importantly, for quarter with period, balance a team, the with of the expectations of XX%. had of $XXX our the

said focus improved conversion for efficacy. working us, we management, inventory gains be As efficient of previously, the the and inventory area a resultant to key in capital continues including effective cash cycle is of further turns, improvement and and the a driver significant

were at our $XXX.X at from $XXX.X payable XXXX, of fiscal XX.X% quarter end which related of the down accounts end million to directly is the reduce Our million, the second at on quarter or and business drag liability purchase supply world on the And flexible pandemic. cash a of the create leverage chain orders very a flows. that the around onset to or the ability

result these free a of approximately $XXX flow million As quarter. improvements, many cash realized positive continued we in of the

the addition flow gains three of sale In for $XX.X total not leaseback. in leaseback million to executed sale remaining of quarter, million second for in visible related approximately million liquidity a was $XX.X $XX.X the buildings five being which completed cash of QX we completed our two of the to the free we buildings balance and sale the the offered, corporate being the jet the to a during adding transaction additional offered, liquidity, close sale Subsequent adding sheet. the quarter, leaseback in transactions an of own

stronger paid outstanding $XXX only of and monetizing assets, million revolver the had estate as X. our we performance proceeds down also Given of million the relatively from $XX the and business, August the in real borrowings

the that 'XX, of qualified additional regards to mature long-term anticipate had we replacing As March expenditures approximately $XXX The bonds participation the XXXX, on unsecured of the capital maturity were We high spend the With continue set and our over issued notes by year-to-date exchanged roughly XXXX previously of between and remaining and we range solicitation the to course retail exchange and provide of bondholders. the we million notes million to of March second In within $XXX those of maturity roughly of bringing remaining in coming mature to July expectations, the newly the the advancing flexibility focus consent $XX.X our strategy we X, as given the extending announced to quarter, majority financial of $XX.X XXXX. the objectives. in XX% notes redeeming million. well completed to by ownership on of offering now months due million for notes, XXXX, date. an the

we vendors. We strategic we in maintenance more or will continue only from this CapEx the for $XX from business, anticipate than have high value million $XX will full million and refresh is previous roughly a to on will we suspended significant in a vendor to the store projects, of note which $XX the I million focus that guidance. year and before estimate, invest reflects reduction holiday spent our allowances, approximately $XX uncertainty near-term million COVID-XX merchandising formal ongoing but XXXX. between mandatory a project, impact the the regarding Due receive for reimbursement on

However, us titles a into that see of to likely August will some we quarter with the QX, you perspective, for QX. several the sales are October. remainder the do takes consistent impact a puts move From provide and third key year. of those want topline of the with headwind somewhat the software in will trends shifts September while will create and And

manufacturers XXXX, product that a shifting specialty drive With in the shifting Call we case choppy as the our Cyberpunk tight. our launches availability remainder and sales video the shifting in Infinite Microsoft's sales business retailer the could title generation the remains into Halo and the year, will the expect into availability be launches such impact Duty console launch of the limited accessories for of later of as QX and of be on game product software new new of generally quarter. for as current results third the Compounding supply,

the for some We beyond. the very key The XXXX the new our pressured lean inventory cash trend pre balance the well we we will launch positive quarter, have from be releases free hardware approach we have maximize particular, sheet, in sales the standpoint liquidity the fourth further new the the and business strategic drive to on own evolution flow us time, well hardware likely the But and side our of upcoming that a are as in ability of positioned business. and strength cash as in technology. and on positions anticipated and of in to software of

relates it further with We GameStop meaningfully significant time. and more poised we a expected X call to a new strengthen and that is As in be over through intensely our to I to efficient, capitalize remain slate software financial architecture, on key pleased growth flow execute to sales are you the a any efforts console we'll these and the navigate as an result organization improvement, the as enabling to on how operator, profit challenging objectives, late expense streamlined questions including by our progress levers. is is seeing continuing are focused that may overall and and to us all our continue this the we important profit experience firsthand to both actions reboot robust turn have. expected led Generation will title XXXX, take now This launch.

your Robert W. with first Sebastian with Our Colin line from Please comes Baird. the proceed Instructions] of [Operator question. question

Great. you. of Couple Thank questions.

volumes? and volumes back the First release versus had And e-commerce trying digital for press clarify some just is commentary the was incremental just if quarter, removed or then year, off, the primarily from those can that secondly, curious understand fiscal any do volume think if that. I on I'm Thank with I markets you. have the last they you reopenings, e-commerce in ultimately. that of to guess you retain do digital stores? the shift to you Or I'm where states EBITDA

to online, seen our as back range. Historically, Yes, that the we've Colin, of in Hi, -- of importantly, e-commerce the been total, we maintain Jim. brought range the stores that's single-digit it's XX%. mid-single-digit contribution at levels north sales are Yes.

And not that's a more business again, into many not I So there's e-commerce pandemic any reiterating the couple months guidance and just a any still secondly, sustainable. because guidance, channel providing shift. Any unknowns. it's not we're too just is important simple of and/or mean, then

rest for the So year. not any reiterating we're further of the guidance

Okay. And then quick one follow-up.

ways platforms you digital digital what is for subscriptions of the as On the sales other platforms? and you. hardware plan those can those that or only in your Thank platforms, participate other or for what's software view

George. it’s the gross vendors Yes. programs We beyond on just units. opportunity participating to those the participating in Hey Colin, we console in And we in the sell and adjust programs. platforms the and digital those means both subscription initial itself, and anticipate both see for capitalize and certainly that to certainly sales margin intent

Okay, much. thank you very

comes line with of Please question from Steph with Wissink question. Jefferies. proceed your Our next

Thank you. Good everyone. afternoon,

have also We questions. two

probably launch. you gen first then just how benchmark the units you. the us fourth you anticipate George, sense we one hardware for launches? next to The prior should one is to volumes help at think come of that Any about available quarter And Jim, cycle for

store Any thinking As model base? Thank cost relative the we us per about profile you measure? as you're think for plans And state store cost sense of cost productivity? thinking are about and to the you. how closures, can of the a the store about overall overall you kind SG&A overall give future around the

prior me know. Like that of expectations, learned don't price today off allocations they're the let the and consoles, we with Steph, with in and I time of you that line did. with the Microsoft start Yes. There same elements that we releases new would well. are the just the this as say at point you, for units probably

them. So now along the we that. go themselves know We consoles as specifically of what know accessory the or with the looks like, don't they breakout

expected. allocated much time, very this to say be But our point how we now partners, the stage in it's of decisions and of be with out. going what as in production just would to I'd that to as getting data consider right it we to So they're line making the in

Jim. Steph, this then is And

quarter-over-quarter of permanent. profile, think full over cost two best is, year-to-date the about thirds way or that I year the On the then think SG&A and for to the changes are

quarter the is And closures that you some initiatives that that for We store aptly out, undertaking related been talked is last out out get of about related but quarter, we're we've but of to started anniversary some year. quite third starting upcoming a some which cost at lot -- the the to end time. pointed of the of last momentum fourth in really in year, to seeing the that we're

rest more we'll year. that have on for here to of the So still go the

could Thanks, toss I guys. If just app. on in the one more

We content haven't expecting bit talk been that about and you CRM little out, Could past. robust expect talked you've may roll for customer be, the data that much to how side? leverage your to a many then what fairly you're how you years? about more app in tracking features And the the

Yes.

You're right, Steph.

said it. lot a haven't We about

that app. We very that Digital a a desktop need longer. a Chief of on development M&A if not large device, mobile We're e-commerce Officer. the percentage And have at new with know, a made I front. you laptop a from think as or new he's And any from look pleased been in you we've

for more extension So on it in app a be was section gaming. far game view the where is that us. catch necessary the what We up of than hub can work we've actually you news an as intuitive prior. greatest There kind gaming as a had latest well. of It'll and social of

You'll track power like be rewards. to up things keep of able your

of it connection that to a piece it, will September. launch too. And there's late So in

to bullish it's place it do. think and go. can excited next it's certainly when to on the that a in about And something about be call but we'll we're when just on able where at it's being ready active, so it's have we're certainly I So more information point almost what

Thank you.

question. Nagle of next comes Bank in question Curtis with proceed line Please America. with Our of your

good Good morning, afternoon, sorry, guys.

margins for gross the the quarter. on one quick very a Just

report some up margins, a what compare preowned We guys have know you things. drove how little have mix the of There's bit gross hardware. anymore. explanations to I numbers you shifted predominantly for difficult looking don't at But just it. the down So guys you gave in

really can't on terms margin of think down give markdowns something huge use, something would just mean, the of get detail a to Anymore numbers. I I on going here and a square is else in help. kind collectibles? could big you be in shift there I there,

hardware again, was in isn't business that hardware all promotional, of our That's of effect collectibles on And Hey little XX% XX% The what the overall various mixed year. means all but certainly, really last terms and No, mix versus Curt, solely and then world, the extensively higher regions, see it's it's not there a margin. the of really that we around about Jim. as we hardware impact more of sales is volume and hardware across had bit mix. the in the really volume on but margin mix rate. that significantly the

Okay, thanks much. very

Yes, you bet.

from Our next Credit comes question your Sigman line with of Seth question. Please proceed Suisse. with

question. Hey, math bit guess I that a that want to did with on for last point, we're little as the I guys, taking because struggling well. thanks follow-up

we hardware mix. So the get

last the shift I mix more hardware. However, to think was severe quarter

us what is point of to rates give categories? speak And would maybe just sense if helpful helpful. bucket second think within preowned you a the can overall of more the performance be then on margin on that else category, Thanks. year-over-year? So the And to could is, specifically going relative you that specifically I comment by would software be

open entering May part software first the all not be lower to the I just on our also there's of in a are the margins. to open market a tends and of world, again, lot stores pre-owned, drove business the think vast attached Again, going an with That's to differential. without to margin volume. obviously stores basket. And you not the still talk stores of And and about ultimately stores without the whole what majority the do is sure. then that's it's around impact function more to talked hardware the June the Yes, of of the pre-owned not our that and traffic the math. And when is for about mix respect traffic

it. Got

So negative overall. software XX pre-owned down category for than the was more the

pre-owned say didn't you we software. differential new But disclose as and I between No, the know, don't that.

that's Got Yes, right. fine. it. All

the I currency around now follow-up past past think curious, GameStop levers this just the is the that question just been in disclosed it capture currency, doing of in my I'm guys used a launches. right around? time and are has unredeemed fair lot the of differently lower in to you some tools For Q. share like the some what you than during is past console example, your it's So share very a

have into going also You'll stores fewer this.

some also you Now, do assets. digital have

you that curious, share? plan? thinking your that How you fair So are guys about making and capture I'm just sure the what's managing

a number things think of this launch. there Look, Yes. I on we're planning are for

earnings to options. in itself, some going new mentioned I script as the are we think payment we be launching

options along some just that you fractional can for or buy and steps payment the So delayed payments way.

We alternatives. leasing doing be will

particular be will those of One for Access their Microsoft platform. All

gives certainly that expect be console alternative of cycle part payment hardware as utilized. well, that will a we pre-owned product be we you then continue will a And this toward a in trade other The that have down that our on is new gaming a own. believe there the to as we that

comment pre-owned part business were he a period. we more think this said, you So time gave Jim weighting contributed heavy to little bit the the But and for of margin closed just as I shift. that on to the

So level reopened, back with around trade getting of coming see no have to there we there's well. sanitary to and we May a parts that there's point to gotten with had a as now nature ingress, concerns level no with in. the even comfort comfort the we and just higher product. We've when of a go product customer dealing to June, And that that and

seeing it's either we're or see putting as kind through activity we up We games putting to UB UB begin ways type So have and an consoles a well. some some sanitation flex in those bit through a of gets treatment activity drive function our effective online. XX.XX% the treatment. an And volumes pre-owned big certainly of also going back activity that's from a that a console as it's come interest pre-owned is based push But cycle worth gaming to that. also activity, noting

obviously, of certainly alternatives, trading bundles we'll fair share alternatives leasing and a alternative, our then we'll inventory. promote option have and we'll So, have payment that

that's George, helpful. really

used could on point. I if Just follow-up that

So up you thinking the about that the for be view is secondary mean, you there business? then of side in How activity And it sounds seeing are may the your that however. side time. some what obviously, like what picking trade that of of are and struggled market? I other the

clarify to a want market you Do of little ways. secondary in bit? couple to I a can interpret

which along of is sideways. selling One

side. market, like? because alternatives been and games that demand. your look that buy right? resale trading business, are What The also used side does on game the down that that that but needs today, someone there are Obviously of trade, just on business other of it's on people has not to So

used what happening demand So for is the games? on side

certainly pre-owned create that Switches very for for which they crossed frame. seen in share think where Yes. current board were supply mean, was than in there constrained closed that demand any our of Look, gaming find. And believe our sell-through for generation sell now that consoles a there we hard those was across Xbox, to demand see and receive awfully able is We quarter script, into it's it the right I PlayStation that Jim an gaming and space as we certainly both certainly, on open right and as early to the can we I in generation, business were the largely fair over Nintendo the will the on as pandemic, period of we devices Clearly, And a others be stores for certainly rapidly. generation there. very But the this We May, current noted. current need. mentioned and time existing demand high our device. fill advantage we've think for we're had high more But now.

opportunity trading sides, I So for there's we the there flywheel once and going on think both that have is us. an going again

Thanks, George. Good luck.

you. Thank

line with with proceed from comes question your next Group. Joe Telsey the Advisory Feldman question. of Please Our

that for in, of you have are thanks the about, seems questions. large, more to holiday stores just you and How drive business. when pre-owned, the given it flow be my you've ask about guys, to share very people in about traffic, I going to different holiday helps your you it got may and helps so like other for drive so Hi out? control the it's with more opened about Can aren't wanted talked coming it stores, traffic this you plan taking as you year, the period? parts thinking

a It's sure. great Yes question.

I we're the penetration think, e-commerce. first of by encouraged all, increased certainly of

like of even potentially. the to I pickup process online it that So buy our straightforward. our traffic us degree think Certainly to stores, store, having makes the certainly into appointments in capabilities allow meet And very pre-sell view what's to where to into of the of happen going these large some influx and plan as just we out and us iconic well, have the store. better events population out of allows an us helps advanced

it. for ready we're So

customers that indications And more to offer mean, of a contactless find there we I up its emphasis in-store out existing timeline. online would think holiday on we less terms there we to And that it. transaction. pick do flexibility probably think well. happen of great and course But II, be Black we lead playing purchases We with And little think that the some whether be that We spread on for season whether I would we along customers Animal that store. and way. And to more a product, Switch, that's a as will operate sales doubt no lost ever more see kind transaction. own Fridays expect with offer we of point well it channels a in great And have the all launches, supply, a think is ways clearly, on little customers the be be going cycle promotional an in We different us our holidays. an in pure console do quarter launch bit the more than have with fourth We there'll e-commerce early find go that us catalog that the before. offer field big about buy of during also and us there and that some a year. unlevel see can then elongated more console own Crossing, its whether demand feel to of the little period share. can obviously in We a the ship on We that we be play them. can newness, Us that you're went many the our can sales and give transaction. I for way. we in from along console due bit I was we those hardware to going But can accessibility Last the in when and

you where then the should you. the year, XXX How thank Can XXX we side. are? And you think real go where this I remind stores. Or refresh the follow-up be to target Like, this? a of it, to about know going just we just this it just of estate forward year Got us on for single-digit the that? can in is is rightsize and it our two year continued that? the kind process? process, what's three Like, to reduction base Or de-densify? on low memory

as take very Europe's years. And is Yes, It's cetera. different. bit your going about in little et to than region to of couple going a different again, it U.S., the sure. a in each think we de-densification mean, I it's look is

that more our a and these give we so, this again, to do large lease a the buying Obviously, lives of not capital gave choices XXX able to without the rest our the deal are And we're is out stores. that to outlay. year, emphasis make way short And in so XXX out XXXX yet. direction us But we're as full there not leases, liability there through we're of for well. around but here process, we're of flexibility, great fiscal

into XXXX. So leases our we'll take continue of favorable leverage to advantage that with that and position

Thanks, great. luck Good the quarter. That's guys. with

Thanks, Joe.

you. Thank

next of question. Bank comes of America. with with your line proceed question from a William Reuter Our Please

you're XXXX holiday question what the be and date that plan? market. first through in expect My to the trough I like liquidity guess open and ahead or your made for it wait buying you're going And the for commentary those tender your guess, your sound you to the maturities around period? not is Hello. do I going to go either back maturity

XX, our the maturity of date. will Yes, and Will. -- guess between is now select is to -- well, redeem intention of That correct. it's end March is which Yes, points that the I

the we're is certainly further intention. that So And the guidance on our of providing again, any rest year. not

here we've and So we look say, in suffice the capital year, little we amount inventory a and this hundreds to of dollars go tunes and millions and is let of just history, over reiterate, a liquidity cash those in overall to back with place do of what and improvements it all if the and at been to working able things of in management me team turns with set we well confident on And the from of to so and certainly sheet that would console into last in balance out that to delivered do, liquidity our remind strength incredibly we the despite our are everybody communicated a year launch. that pandemic, we make way, it positions overall big we've incredibly do as that us this way through liquidity just we we the and global standpoint. of

come No, through that's right. all

capital more a than going certainly working generate to lot expected. You're

this In further year. back-half to had we're million that in this looks Are the terms of out $XXX in cost year? laid first-half year, of there the of the the savings, goal savings cost we've you that see going a of it still like achieved

the to start some We'll back-half the of took in we annualize out out XXXX. so of costs

won't same rate, of of but to continuing efficiencies. run cost still type So the elements work you we're on see

inside comes that of the stores. operations our So of

I you G&A. lot of as said. still as our permanent. a on of But mean, more lot the Some elements, a I where of million overhead it of in two-thirds is several that we're way $XXX it there comes mentioned, working than

That's timing the going business? obviously for I capital. of And for be me, that plans? Thanks. be drain, it plans I be think on of Okay. working you're you And the guess, a much lastly, do payment guess me. can the implementing is those implementing then will just cash drag on how payment these to what when

POS won't at can mean, will these third-party take. at options all. that be I They they Yes. be

bringing any we're not liability. on So

So there is no working capital whatsoever. impact

just They're all the whatsoever. none Yes, I'll third-parties. reiterate,

Okay. Thank you.

bet. You

from Fargo. Please question your question. Bryan with final Hunt of Our comes with the line Wells proceed

have If time. and cycle, didn't thanks Just of the I new last in a couple George Jim, cycle. handful for me. for the look hardware ground, years back we

last holiday fewer potential stores the went five today all season. of million increase? up end discipline new we end the versus, the in in somewhere inventory given $XXX on terms inventory What $XXX you have the should low that again, your high inventory million a into anticipate the on going between Your amount of years

and Bryan, about, it's It's a really that. it's turn. centered really say, conversion the inventory the which all This I'd in And to thanks efficiency trailing Yes. globally question. on business equates for on about great cash would cycle, times. couple go the now turning talking almost a of We're years four you're XX than times years basis. approaching less back was five a

that's to see times. see well And those terms our is And our that. goal. so five ultimate on way our to goal We're above

in means work recapturing to sales. of stores other there. and because inventory. of recapturing stores closing does to that we So That that the sold aspect of goods mean? What We're movement sales transference little lot of bit cost we're those is that those the do a the have important, of even more a

we those as inventory and near And thinking because upcoming, quickly, about see launches towards it the so more $X anywhere the in a launch inventory on average any basis, demand as billion when basis. we And over so turns an especially spike average well there's business the these won't we numbers, occur. so you was even get much on carrying see won't go we annualized --

that's So helpful. hopefully,

controller, any year That is. for second find Jim. there's to And if stores up. then way new one you, know three to couldn't and Thank looking teenager don't I a frame I've it question, anything. got my was

was how fiscal wondering, can in sales what in shortages. current-- to there maybe they and Hunt in you your only I the So, current through is in QX, your not we period? QX. in sales way the shortages but And hardware and limited quantify family the the hardware did maybe any lived

know. don't I Yes,

there it available, was spotty. of that the I a In factor the great critical newness just was and think was is but terms quantification, new products flow of is think example. the there Switch I when was And that's the Bryan thing was

customers is great of don't accessories sell with control and our the manufacturers that great. and was orders, talked from stay Gen private quantify during to a plant. fantastic. X then a reception pandemic shifted have pull the But through that again, really Gen remember manufacturing that. the New from way label part a at example. the know home is even about X height we peak Again, in then their And The there's I same is from the at of the time, forward to this

a confluence, as product. think confluence launching So and Generation little we there's the of we into a short-term just bit lived X did a it's

my a for then scenario. Epic of And Alright. you last create in talk opportunity about that and and conflict of life party question, the all? in potential for third the seller and/or theoretical between you conflict And may Apple opportunities Can how bring advantages may and to hardware kind this software?

I much situation. the very this within won't always it we're mean, we're of the other We're no opportunity Yes. exception. following we and for watching. closely look And obviously aware is than very say I and industry,

So watching sidelines we're at watching closely. but the moment, the from

I good. time and Very your of luck. appreciate best

Thanks, Bryan.

remarks. closing I have back over any the the end to and of Mr. session. George would for like Ladies call we gentlemen, Sherman question-and-answer reached turn our And to

much. very Thanks

dramatic all the store thank to such for omnichannel frontlines. our change as the all your want working quickly folks on in interest the course quick for of appreciate the those team, call center, so it. GameStop at such entire you they've I refurbishment out for thanks distribution then our teams, Just particularly team that quarter, teams, and all the well. really during center done operation And GameStop. change for a always to effecting And of

This teleconference. today's concludes

your Thank And have day. for wonderful may now lines You participation. this a disconnect at you your time.