Q2 2021 GameStop Corp Earnings Call
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Greetings and welcome to the Gamestop second quarter fiscal 2021 earnings conference call. At this time, all participants are in a listen only mode.
As a reminder, this conference call is being recorded and will be archived for two months on Gamestop Investor Relations website.
This call will include forward looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations any such statements should be considered in conjunction with the cautionary statements and the safe Harbor statement in the earnings release and risk factors discussed in reports filed with the SEC.
Gamestop assumes no obligation to update any of these forward looking statements or information.
A reconciliation and other information regarding non-GAAP financial measures discussed on the call can be found in the company's earnings release issued earlier today as well as the Investor section of the Gamestop Web site.
Please note that the company will not be hosting a Q&A session as part of today's call.
Now I would like to turn the call over to the company's Chief Executive Officer, Matt furlong.
Thank you, it's good to be with everyone today.
Wanted to start by thanking our entire team for all of their hard work given the pace at which the organization is changing.
I had the chance to meet a number of team members across our stores' fulfillment centers on home office and I look forward to meeting more in the coming weeks and months.
We appreciate how everyone is stepping up and embracing gamestop new operating principles.
Since we last heard from US in June a refreshed board of directors and New management team have settled in.
We now have unified leadership fully focused on two long term goals delighting customers and delivering value for stockholders.
In addition to focusing on long term opportunities, we took a number of steps over the past quarter to fortify the companys infrastructure and technology.
We are focused on positioning gamestop to scale, while obsessing over competitive pricing expansive selection and fast shipping.
Our actions included continuing to add technology talent across the organization, including individuals with experience in E Commerce.
Hi, UX operations and supply chain.
We also continued to expand our fulfillment network by adding a 530000 square foot facility in Reno, Nevada.
This new facility, which is expected to be operational next year will position us to further expand selection and expedite shipping.
With this addition, the company's fulfillment network will span both coasts of the Continental U S for the first time.
Our new 700000 square foot facility in York, Pennsylvania also began shipping orders during the quarter.
We grew our catalog by adding new products and leading brands across consumer electronics collectible toys and more.
We signed a lease on a new customer care facility in South, Florida and started adding talent to that team as we continue to build out customer care operations in the U S.
Lastly, we further strengthened our balance sheet and capital position by raising more than $2.0 billion in net proceeds from the June ATM program.
Let me now turn to our financial results for the quarter.
Net sales increased 25, 6% to $184.0 billion.
Compared to $942 million during the same period in 2020.
We achieved this growth while overcoming a roughly 9% reduction in our global store fleet due to de Densification efforts and ongoing store closures across certain international markets due to the pandemic.
We believe net sales as the primary metric by which stockholders should assess the companys execution.
SG&A was $387.0 million or 32% of sales compared to $350.0 million or 37% of sales in last year's second quarter.
Adjusting for severance and certain other costs, our adjusted SG&A was $375.0 million or 31, 5% of sales compared to $345.0 million or 35, 8% of sales during the same period last year.
The 430 basis points of leverage was primarily driven by store reopening after widespread shutdowns due to the pandemic in Q2 2020.
We reported a net loss of $67.0 million.
Or <unk> 85 per diluted share compared to a net loss of $114.0 million.
Loss per diluted share of $72.0
In the prior year second quarter.
Our adjusted net loss was $55 million or <unk> 76 per diluted share compared to adjusted net loss of $92 million or a loss of $43.0 per diluted share in the fiscal 2022nd quarter.
Our global store Count was 4642 at the end of the quarter.
Turning to the balance sheet, we ended the quarter with cash and restricted cash of $776.0 billion.
Which is just over $1 billion higher than the end of the second quarter last year.
As we announced in June we raised approximately $2.0 billion in net proceeds through the issuance of 5 million shares of common stock under our ATM.
We intend to continue using those proceeds for general corporate purposes, as well as for investing in growth initiatives and maintaining a strong balance sheet.
As a result of the ATM total shares outstanding are now approximately $84.0 million.
At the end of the quarter, we had no borrowings under our asset based revolving credit facility and no long term debt other than a $52.0 million low.
Low interest unsecured term loan associated with the French government's response to COVID-19.
Debt levels compared to the second quarter of last year were down $431.0 million.
Capital expenditures for the quarter were $18.0 million, bringing.
Bringing year to date Capex investments to $30.0 million a number we anticipate will increase as the company continued investing in growth initiatives.
In the second quarter cash flow from operations was an outflow of $16.0 million.
Compared to an inflow of $200.0 million during the same period last year largely due to the investments in inventory, we are making to drive sales growth.
In terms of our outlook, we are not providing formal guidance at this time.
Thank you again for your support and interest in Gamestop.
This concludes today's conference call. Thank you for your participation.