GameStop Corp. (NYSE: GME) Q3 2021 earnings name dated Dec. 08, 2021
Company Individuals:
Matt Furlong — Chief Government Officer and Director
Presentation:
Operator
Greetings, and welcome to GameStop’s Third Quarter Fiscal 2021 Earnings Convention Name. At the moment, all contributors are in a listen-only mode. As a reminder, this convention name is being recorded and shall be archived for 2 months on GameStop’s Investor Relations web site.
This name will embody forward-looking statements, that are topic to numerous dangers and uncertainties that would trigger precise outcomes to vary materially from expectations. Any such assertion ought to be thought of together with the cautionary statements and the Secure Harbor assertion within the earnings launch and threat components mentioned within the studies filed with the SEC. GameStop assumes no obligation to replace any of those forward-looking statements or info. A reconciliation and different info relating to non-GAAP monetary measures mentioned on the decision could be discovered within the firm’s earnings launch issued earlier at present, in addition to the Traders part of the GameStop web site. Please word that the corporate is not going to be internet hosting a question-and-answer session as a part of at present’s name.
Now, I want to flip the decision over to the corporate’s Chief Government Officer, Matt Furlong.
Matt Furlong — Chief Government Officer and Director
Thanks. It’s good to be with everybody. Earlier than going over the quarter, I need to thank all our staff members for persevering with to carry super focus and depth to GameStop’s mission. We proceed to see a customer-first tradition taking maintain all through our shops, success facilities and company places of work. Sustaining this emphasis on the shopper will stay key, as we work to develop throughout classes and new areas.
Throughout the quarter, we targeted on increasing our choice, accelerating supply speeds and bettering the shopper expertise. We additionally made long-term investments in our infrastructure, expertise and know-how. We imagine our emphasis on the long run, is positioning us to construct what’s going to finally change into a a lot bigger enterprise, relative to the place we’re in 2021. We’ve additionally been exploring rising alternatives in blockchain, NFTs and Internet 3.0 gaming.
With this context in thoughts, listed here are a couple of current initiatives of word. We continued rising our catalog, by including new merchandise throughout client electronics, PC gaming and different classes, with vital addressable markets. Among the manufacturers we’ve established new and expanded relationships with, embody Samsung, LG, Razer, Vizio, Logitech and ASUS, simply to call a couple of. Gross sales attributable to those new and expanded model relationships, helped to drive progress within the quarter. We additionally started implementing new assortment methods inside our shops, together with an enlargement of PC gaming merchandise throughout roughly 60% of U.S. areas.
With respect to hiring, we saved including expertise throughout the group, together with specialists with expertise in e-commerce, UI, UX, blockchain, operations and provide chain. Over the course of 2021, we’ve got made greater than 200 senior hires from a few of the prime know-how corporations. We additionally lately added a brand new workplace in Seattle, and have recognized an workplace location in Boston, positioning us inside two tech hubs with robust native expertise markets. Having footprints in these cities will assist us appeal to and retain tech-focused groups, with experience in e-commerce and different areas.
Shifting gears to our success community, we began delivery orders from Reno, Nevada, whereas growing shipments from York, Pennsylvania. Our expanded community is constant to assist us enhance delivery occasions to clients throughout the U.S. Moreover, we lately introduced a plan to rent as much as 500 associates at our new buyer care facility in South Florida. The power, which is now operational, shall be a key a part of our new U.S.-based buyer care operation.
Lastly, we additional strengthened our monetary place, by securing a brand new $500 million ABL facility, which closed early in November and consists of improved liquidity and phrases. The power offers for diminished borrowing prices, lighter covenants and extra flexibility.
Let me now flip to our monetary outcomes for the quarter. Internet gross sales elevated 29.1%, to simply below $1.3 billion in comparison with simply over $1 billion, throughout the identical interval in 2020. As indicated previously, long-term income progress is the first metric, by which we imagine stockholders ought to assess our execution. SG&A was $421.5 million or 32.5% of gross sales, in comparison with $360.4 million or 35.9% of gross sales in final yr’s third quarter. We reported a web lack of $105.4 million or $1.39 per diluted share, in comparison with a web lack of $18.8 million or loss per diluted share of $0.29 within the prior yr third quarter. There have been no onetime transformation, transaction or associated prices in the course of the interval.
Turning to the stability sheet, we ended the quarter with money and money equivalents of over $1.4 billion, practically $1 billion larger than the tip of the third quarter final yr. We proceed to keep up a large money place, even whereas front-loading investments in stock, to fulfill heightened demand and mitigate the total affect of world provide chain points. On the finish of the quarter, we had no borrowings below our ABL facility and no debt apart from a $46.2 million low-interest, unsecured time period mortgage related to the French authorities’s response to COVID-19.
Complete liabilities in comparison with the third quarter of final yr have been down $262.1 million. Capital expenditures for the quarter have been $12.5 million, bringing year-to-date capex to $40.7 million. We anticipate capex will proceed to extend, as we make pragmatic investments in our infrastructure and tech.
Within the third quarter, money movement from operations was an outflow of $293.7 million, in comparison with an outflow of $184.6 million throughout the identical interval final yr. With a purpose to meet buyer demand and drive gross sales progress amidst the tight provide chain, we grew our stock to $1.14 billion as of the shut of the quarter, in comparison with $861 million on the shut of the prior yr’s third quarter. By way of our outlook, we’re not offering formal steering presently.
Earlier than wrapping up, I do need to shortly reinforce some key factors about our go-forward working philosophy. Our emphasis on the top-line stems from our management staff’s vital e-commerce expertise, and imagine that income progress is essential. We imagine income progress will translate to scale and market management. And from there, scale and market management will translate to higher free money flows over time. Our deal with the long run, means we’ll constantly prioritize progress and market management over short-term margins.
I’ll depart it there for this quarter. As at all times, we respect all the keenness and assist from our clients, workers, and stockholders, who we imagine are the most effective on this planet. Thanks.
Operator
[Operator Closing Remarks]
