GameStop Corp

Previous wording

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. Fiscal 2024 consists of 52 weeks ending February 1, 2025 ("fiscal 2024"). Fiscal 2023 consisted of 53 weeks ended on February 3, 2024. All three-month periods presented herein contain 13 weeks. 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.

Current wording

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. Fiscal 2024 consists of 52 weeks ending February 1, 2025 ("fiscal 2024"). Fiscal 2023 consisted of 53 weeks ended on February 3, 2024. All six month periods presented herein contain 26 weeks. 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.

Previous wording

•Achieve Profitability. During fiscal 2023, we continued to optimize our cost structure to align with our current and anticipated future needs. We will continue to focus on cost containment as we look to operate with increased efficiency.

Current wording

•Achieve Profitability. During fiscal 2023, we continued to optimize our cost structure to align with our current and anticipated future needs. We will continue to focus on cost containment, including closing underperforming stores, as we look to operate with increased efficiency.

Previous wording

As part of our efforts to achieve sustained profitability, we continue to evaluate our portfolio of assets to validate their strategic and financial fit and to eliminate redundancies. During fiscal 2023, we exited our operations in Ireland, Switzerland, and Austria. While we expect our cost containment efforts to yield reductions in selling, general and administrative ("SG&A") expenses in the long term, we have incurred and may continue to incur non-recurring costs related to these efforts in the short term.

Current wording

While we expect our cost containment efforts to yield reductions in selling, general and administrative ("SG&A") expenses in the long term, we have incurred and may continue to incur non-recurring costs related to these efforts in the short term.

Previous wording

The Three Months Ended May 4, 2024 Compared to the Three Months Ended April 29, 2023

Current wording

The Three and Six Months Ended August 3, 2024 Compared to the Three and Six Months Ended July 29, 2023

Previous wording

During the three months ended May 4, 2024, net sales in our Europe, Canada, Australia, and United States segments decreased by 37.2%, 32.1%, 31.0%, and 25.8%, respectively, compared to the prior year. The decrease in consolidated net sales for the three months ended May 4, 2024 compared to the prior year was primarily attributable to a $98.6 million, or 29.1%, decline in the sale of new software, a $220.5 million, or 30.4%, decline in the sale of hardware and accessories, and a $36.2 million, or 20.9%, decline in the sale of collectibles.

Current wording

During the three months ended August 3, 2024, net sales in our Canada, Europe, Australia, and United States segments decreased by 42.9%, 40.4%, 29.3%, and 28.2%, respectively, compared to the prior year. The decrease in consolidated net sales for the three months ended August 3, 2024 compared to the prior year was primarily attributable to a $189.3 million, or 47.7%, decline in the sale of software, a $145.8 million, or 24.4%, decline in the sale of hardware and accessories, and a $30.4 million, or 17.9%, decline in the sale of collectibles.

Previous wording

During the three months ended May 4, 2024, gross profit decreased $42.8 million, or 14.9%, compared to the prior year. Gross profit as a percentage of net sales increased to 27.7%, compared to 23.2% in the prior year. The decrease in gross profit is primarily attributable to the decrease in net sales, as further outlined in the net sales commentary, partially offset by $10.8 million, or 38%, decrease in freight expenses from added cost optimizations.

Current wording

During the three months ended August 3, 2024, gross profit decreased $57.1 million, or 18.7%, compared to the prior year. Gross profit as a percentage of net sales increased to 31.2%, compared to 26.3% in the prior year. The decrease in gross profit is primarily attributable to the decrease in net sales, as further outlined in the net sales commentary.

Previous wording

During the three months ended May 4, 2024, SG&A expenses decreased $50.6 million, or 14.6%, compared to the prior year. SG&A expenses as a percentage of sales increased to 33.5% in the current year compared to 27.9% in the prior year.

Current wording

During the three months ended August 3, 2024, SG&A expenses decreased $51.7 million, or 16.0%, compared to the prior year. SG&A expenses as a percentage of sales increased to 33.9%, compared to 27.7% in the prior year.

Previous wording

The decrease in SG&A expenses for the three months ended May 4, 2024 compared to the prior year is primarily attributable to a reduction in labor-related, consulting service, and marketing costs of$49.7 million, driven by our continued focus on cost reduction efforts, partially offset by $14.3 million of deferred income recognized in the prior year in connection with our NFT marketplace. Store related costs decreased $6.1 million in the current year in connection with prior year store closures, primarily in our European segment.

Current wording

The decline in SG&A expenses for the three months ended August 3, 2024 compared to the prior year is primarily attributable to a reduction in labor-related, consulting service, and marketing costs of $41.7 million, driven by our continued focus on cost reduction efforts, and a $6.4 million benefit from legal settlements in the current year period, partially offset by $14.3 million of deferred income recognized in the prior year in connection with our NFT marketplace. Additionally, store-related costs decreased $8.4 million compared to the prior year in connection with prior year store closures, primarily in our European segment.

Previous wording

During the three months ended May 4, 2024, we recognized net interest income of $14.9 million, compared to net interest income of $9.7 million in the prior year. The impact is primarily attributable to interest income increasing as a result of higher returns on invested cash, cash equivalents, and marketable securities.

Current wording

The impact is primarily attributable to interest income increasing as a result of higher returns on invested cash, cash equivalents, and marketable securities, as well as return on cash received from the issuance and sale of shares of our common stock from the ATM Offering.

Previous wording

We recognized income tax benefit of $3.4 million for the three months ended May 4, 2024 compared to an income tax benefit of $0.1 million for the same period in 2023. Our effective income tax rate was 9.5% for the three months ended May 4, 2024 compared to 0.2% for the same period in 2023.

Current wording

We recognized income tax expense of $2.7 million for the three months ended August 3, 2024 compared to an income tax benefit of $0.2 million for the three months ended July 29, 2023. Our effective income tax rate was 15.4% for the three months ended August 3, 2024 compared to 6.7% for the three months ended July 29, 2023.

Previous wording

Our effective income tax rate for the three months ended May 4, 2024 as well as the three months ended April 29, 2023 are primarily due to the recognition of tax benefits on certain current period losses, partially offset by forecasted income taxes due in certain foreign and state jurisdictions in which we operate.

Current wording

Our effective income tax rate for the three months ended August 3, 2024, as well as the three months ended July 29, 2023, are primarily due to the recognition of tax benefits on certain current period losses, partially offset by forecasted income taxes due in certain jurisdictions in which we operate.

Previous wording

Our principal sources of liquidity are cash from operations, cash on hand, and borrowings from the capital markets, which include our revolving credit facilities. As of May 4, 2024, we had total unrestricted cash and cash equivalents on hand of $999.9 million, marketable securities of $83.0 million, and an additional $244.1 million of effective available borrowing capacity under our revolving credit facilities.

Current wording

Our principal sources of liquidity are cash from operations, cash on hand, and borrowings from the capital markets, which include our revolving credit facilities. As of August 3, 2024, we had total unrestricted cash and cash equivalents on hand of $4,193.1 million, marketable securities of $11.1 million, and an additional $244.1 million of effective available borrowing capacity under our revolving credit facilities.

Previous wording

Our cash and cash equivalents are carried at fair value and consist primarily of U.S. government bonds and notes, money market funds, cash deposits with commercial banks, and highly rated direct short-term instruments that mature in 90 days or less.

Current wording

Our cash and cash equivalents are carried at fair value and consist primarily of cash, money market funds, cash deposits with commercial banks, U.S. government bonds and notes, and highly rated direct short-term instruments that mature in 90 days or less.

Previous wording

Our marketable securities are also carried at fair value and include investments in certain highly-rated short-term government notes, government bills, and time deposits. Our marketable securities have a maturity date of greater than 90 days but less than one year.

Current wording

Our marketable securities are carried at fair value and include investments in certain highly-rated short-term government notes, government bills, and time deposits. Such investments with an original maturity in excess of 90 days and less than one year are classified as marketable securities.

Previous wording

We opened investment portfolios consisting of U.S. government treasury notes and bills. Additionally, we also invested in time deposits. As of May 4, 2024, the investment portfolios' aggregate balance was $83.0 million, all of which are recognized in marketable securities. See Item 1, Part I, "Notes to the Consolidated Financial Statements", Note 4, "Fair Value Measurements," for additional information.

Current wording

As of August 3, 2024, the investment portfolios' aggregate balance was $11.1 million, all of which are recognized in marketable securities . See Item 1, Part I, "Notes to the Consolidated Financial Statements", Note 4, "Fair Value Measurements," for additional information.

Previous wording

In fiscal 2021, the six separate unsecured term loans held by our French subsidiary, Micromania SAS, for a total of €40.0 million were extended for five years. As of May 4, 2024, $25.7 million remains outstanding.

Current wording

In fiscal 2021, the six separate unsecured term loans held by our French subsidiary, Micromania SAS, for a total of €40.0 million, were extended for five years. As of August 3, 2024, $23.4 million remains outstanding.

Previous wording

In November 2021, we entered into a credit agreement for a secured asset-based credit facility comprised of a $500 million revolving line of credit which matures in November 2026 ("2026 Revolver"). The 2026 Revolver includes a $50 million swing loan revolving sub-facility, a $50 million Canadian revolving sub-facility, and a $250 million letter of credit sublimit. On March

Current wording

In November 2021, we entered into a credit agreement for a secured asset-based credit facility comprised of a $500 million revolving line of credit maturing in November 2026 ("2026 Revolver"). The 2026 Revolver included a $50 million swing loan revolving sub-facility, a $50 million Canadian revolving sub-facility, and a $250 million letter of credit sublimit.

Previous wording

As of the end of the first quarter of 2024, based on our borrowing base and amounts reserved for outstanding letters of credit, total effective availability under the 2026 Revolver was $244.1 million, with no outstanding borrowings and outstanding standby letters of credit of $5.9 million.

Current wording

As of the end of the second quarter of 2024, based on our borrowing base and amounts reserved for outstanding letters of credit, total effective availability under the 2026 Revolver was $244.1 million, with no outstanding borrowings. As of August 3, 2024, outstanding standby letters of credit issued under the 2026 Revolver are $5.9 million.

Previous wording

Separate from the 2026 Revolver, we maintain uncommitted facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees, at times supported by cash collateral. As of May 4, 2024, we had bank guarantees outstanding in the amount of $9.5 million outside of the 2026 Revolver.

Current wording

Separate from the 2026 Revolver, we maintain uncommitted facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees, at times supported by cash collateral. As of August 3, 2024, we had letters of credit and other bank guarantees outstanding in the amount of $9.7 million outside of the 2026 Revolver.

Previous wording

Offering”). Pursuant to the prospectus supplement relating to the ATM Offering filed with the SEC on May 17, 2024 (the “May Prospectus Supplement”), we sold an aggregate of 45.0 million Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately $933.4 million.

Current wording

On May 17, 2024, we entered into an Open Market Sale Agreement SM(the “Sales Agreement”) with Jefferies LLC (the “Sales Agent”) providing for the sale by the Company of shares of our Class A common stock, par value $0.001 per share (“Common Shares”), from time to time, through the Sales Agent in connection with an “at-the-market offering” program (the “ATM Offering”). Pursuant to the prospectus supplement relating to the ATM Offering filed with the SEC on May 17, 2024 (the “May Prospectus Supplement”), we sold an aggregate of 45.0 million Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately $933.4 million.

Previous wording

Pursuant to the prospectus supplement relating to the ATM Offering filed with the SEC on June 7, 2024, (the “June Prospectus Supplement”), we sold an aggregate of 75.0 million additional Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately $2.137 billion.

Current wording

Pursuant to the prospectus supplement relating to the ATM Offering filed with the SEC on June 7, 2024, (the “June Prospectus Supplement”), we sold an aggregate of 75.0 million additional Common Shares for aggregate gross proceeds before commissions and offering expenses of approximately $2,137 million.

Previous wording

During the three months ended May 4, 2024, cash flows from operating activities were an outflow of $109.8 million, compared with an outflow of $102.7 million during the same period last year. Cash used in operating activities during the three months ended May 4, 2024 was primarily due to the impact of our net loss, an increase in merchandise inventory, and a decrease in trade payables, partially offset by a reduction in accounts receivable. Cash used in operating activities during the three months ended April 29, 2023 was primarily due to the impact of our net loss and an increase in merchandise inventory, partially offset by an increase in trade payables and a reduction in accounts receivable.

Current wording

Cash flows used in operating activities during the six months ended August 3, 2024 was primarily due to a decrease in accounts payable and accrued liabilities, as well the impact of our net loss, partially offset by a reduction in accounts receivable and a reduction in merchandise inventory. Cash flows used in operating activities during the six months ended July 29, 2023 was primarily due to a decrease in accounts payable and accrued liabilities as well as the impact of our net loss, partially offset by a reduction in accounts receivable.

Previous wording

Cash flows from investing activities were an inflow of $189.8 million during the three months ended May 4, 2024 compared to an outflow of $6.7 million during the same period last year. Cash provided by investing activities during the three months ended May 4, 2024 was primarily attributable to the maturity of marketable securities. Cash provided by investing activities during the three months ended April 29, 2023 was primarily attributable to purchases of marketable securities and ongoing technological investments, partially offset by proceeds from sales and maturities of marketable securities.

Current wording

Cash provided by investing activities during the six months ended August 3, 2024 was primarily attributable to proceeds from the maturity of marketable securities. Cash flows used in investing activities during the six months ended July 29, 2023 was primarily attributable to purchases of marketable securities and ongoing technological investments, partially offset by proceeds from sales and maturities of marketable securities.

Previous wording

Cash flows from financing activities were an outflow of $2.7 million during the three months ended May 4, 2024 compared to an outflow of $2.8 million during the comparable prior year period. Cash used in financing activities during both the three months ended May 4, 2024 and the three months ended April 29, 2023 was primarily attributable to the repayments on our government-guaranteed low interest French term loans due through October 2026.

Current wording

Cash flows provided by financing activities during the six months ended August 3, 2024 was primarily due to net proceeds of $3,055.7 million received from the issuance of shares of our common stock in connection with the ATM Offering. Cash flows used financing activities during the six months ended July 29, 2023 was attributable to the repayments on our government-guaranteed low interest French term loans due through October 2026 and the settlement of stock-based awards.

Previous wording

We did not adopt any Accounting Standard Updates (“ASU”) in the first quarter of fiscal 2024. Additionally, there are no current ASUs issued, but not adopted, that are expected to have a material impact on the Company.

Current wording

We did not adopt any Accounting Standard Updates (“ASU”) in the second quarter of fiscal 2024. Additionally, there are no current ASUs issued, but not adopted, that are expected to have a material impact on the Company.